Amazon sales rise £3.5 billion, but share price slumps

Amazon announced a sales rise of more than five billion US dollars (£3.5bn) in its latest financial results, but share prices slumped as the firm missed investor expectations.

The technology and e-commerce giant announced the revenue increase for the final three months of 2015 to 35.7 billion US dollars (£26.1bn), up from just over 29 billion (£20.1bn) in 2014. The three-month time-frame includes the crucial Christmas period, always an important time for the online retailer.

But despite figures for the year that showed a 71% rise in revenue and 186% rise in profit, the results missed the expectations set by analysts and investors, and as a result share prices dropped 12% in after-hours trading on the US stock market.

Amazon founder and CEO Jeff Bezos remained positive however, following the results.

"Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift. This year, we pass 100 billion dollars in annual sales and serve 300 million customers.

"And still, measured by the dynamism we see everywhere in the marketplace and by the ever-expanding opportunities we see to invent on behalf of customers, it feels every bit like day one."

The firm also reported success in other areas - namely its own-brand hardware and Amazon Prime membership plan. Amazon said its Fire TV streaming devices remain the best-selling in the US, while Prime membership - which includes access to the Fire TV streaming service of films and television, as well as a music service and quicker delivery from Amazon Store - rose by 51% globally.

Technology expert and senior managing editor at CNET, Kent German, said: "Despite Amazon reporting its third straight quarter of profits and record sales, the company missed analyst expectations by a wide mark.

"It continues to expand in new areas like cloud services, streaming entertainment and hardware, but the growing number of Amazon Prime users are presenting the company with a fulfilment problem. It hasn't been able to recover the shipping costs it's incurring to meet its promise of free delivery to Prime customers.

"The challenge over the next year will be to cut shipping costs without prohibitively raising the cost of Prime membership."