Amazon shares dip as cloud revenue misses Street; analysts still upbeat

Fri Feb 3, 2017 10:46am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Rishika Sadam

(Reuters) - Amazon.com Inc's (AMZN.O: Quote) shares fell as much as 4.2 percent on Friday after the company missed Wall Street targets for its closely watched cloud computing business.

Shares fell to $804 in early trading, a day after the company reported lower-than-expected fourth-quarter revenue and said it would continue to spend heavily this year, as it looks to take control of its delivery chain and expand its video service around the world.

At least six brokerages cut their price targets on the stock, bringing the median target price to $925.

"This is the first time we can recall that AWS (Amazon Web Services) revenue has missed Street numbers," RBC analysts said in a note.

"One likely explanation for the miss could be the seven price cuts in the quarter and that took effect on December 1st."

Amazon competes with Microsoft Corp (MSFT.O: Quote) and Google-parent Alphabet Inc (GOOGL.O: Quote) in cloud computing, and all three companies have been cutting prices to attract more customers who are moving to cloud for the first time.

Amazon Web Services, the company's fast-growing and lucrative cloud business, posted a 47 percent jump in revenue to $3.54 billion, but fell short of the average analyst estimate of $3.60 billion, according to FactSet StreetAccount.

However, analysts were largely unconcerned about the company's spending plans, and instead focused on its longer term prospects.   Continued...

 
Amazon.com's logo is seen at Amazon Japan's office building in Tokyo, Japan, August 8, 2016. REUTERS/Kim Kyung-Hoon