UPDATE, 2:43 PM: The company could add as much as $40 to the current $79 annual fee, CFO Tom Szkutak told analysts in a conference call to discuss earnings. While no decisions have been made, he and other execs say that the current price has been in place for nine years. Over that time delivery and other costs have risen.
PREVIOUS, 1:11 PM: Maybe Amazon will need its drones because the Q4 earnings report it just released failed to deliver, at least as measured by Wall Street’s optimistic expectations. The stock price is down 9%+ in post-market trading after the e-retailer reported net income of $239M, up 146% vs last year’s Q4, on revenues of $25.6B, +20.3%. That missed analysts’ target for revenues of $26.1B. Earnings at 51 cents a share also fell short of predictions for 66 cents. It looks like Amazon’s electronics sales were hit harder than many anticipated from the holiday season price war waged by Best Buy and big box retailers including Wal-mart. Sales in the electronics and general merchandise category were up 23%, a slower pace than last year’s 28%. Media sales grew 11% worldwide, up from 8% last year, and in North America they rose +21%, up from 13%. The company says that it had a “record setting holiday season” for Amazon Prime, the $79 a year service that wipes out delivery charges for many items and offers no-charge video streaming. “Prime was so popular that Amazon limited new Prime membership signups during peak periods,” the earnings release says. CEO Jeff Bezos used the announcement to pitch the company’s products and services. “It’s a good time to be an Amazon customer,” he says. “You can now read your Kindle gate-to-gate [on airplanes], get instant on-device support via our revolutionary Mayday button, and have packages delivered to your door even on Sundays.” The company says it expects the generate as much as $19.9B in revenues in the current quarter, with operations gaining or losing as much as $200M.
Here’s how media sales looked: