AMAZON SHARES FALL AFTER HOURS AS COSTS RISE.

• Amazon. com Inc. reported disappointing sales in the holiday quarter and said revenue in the current period may miss estimates, raising concerns that rising spending on warehouses, movies and gadgets isn’t yet translating into faster growth.

Revenue increased 22 per cent to US$43.7 billion in the fourth quarter, the Seattle- based company said Thursday in a statement. Analysts estimated US$ 44.7 billion, according to data compiled by Bloomberg. Sales in the c urrent quarter will be US$ 33.3 billion to $ 35.8 billion, the company said, compared with analysts’ projections of US$36 billion.

Foreign currency changes reduced fourth-quarter sales growth by two percentage points, the company said. In Amazon Web Services, the company’s cloud- services division, revenue was US$3.5 billion, up 47 per cent from a year earlier. While cloud computing is Amazon’s fastest- growing and most profitable segment, that’s down from a 69-per-cent rise in the third quarter. Price reductions from the unit contributed to the slowdown, said Ron Josey, an analyst at JMP Securities.

“Expectations got way ahead of themselves in the fourth quarter and this is a reset,” he said.

Shares fell as much as 4.6 per cent in extended trading after closing at US$ 839.95. The stock had gained more than 10 per cent over the past month in anticipation of a strong holiday period.

Retail competitors, including Wal- Mart Stores Inc., are struggling to match Amazon’s quick delivery on a wide assortment of goods as shoppers shift their spending from stores to websites and smartphones. U. S. online sales in November and December totalled US$ 91.7 billion, up 11 per cent from the previous year, according to Adobe Systems Inc. The world’s largest online retailer also attracts customers with its US$ 99- a- year Amazon Prime subscription, which includes delivery discounts, music and video streaming and photo storage.

Amazon reported operating expenses rose 23 per cent to US$42.5 billion in the quarter.

The spending included US$ 5.7 billion to store and deliver items, particularly those ordered with fast shipping by Prime customers.

The company’s forecast expects less profit than a year ago even though revenue is increasing, which is why investors are concerned about spending, said Michael Pachter, an analyst at Wedbush Securities.

“It means they’re going to spend a ton of money,” Pachter said.

“When you see revenue go up and earnings go down, it spooks people.”