Amazon shares set for 9% drop on poor Christmas sales

Amazon shares are expected to slide 9% when Wall Street opens, as the online retailer's sales failed to meet analyst expectations over Christmas.

The internet giant reported sales of $17.4bn in the last quarter, $800m below consensus forecasts. Although this figure is up 35% on the year, it also shows sales are growing at a slower rate than the previous three quarters and operating income also fell 45% to $260m.

In after hours trading the shares dropped 8.7% to $177.50 per share as Amazon is likely to report the eurozone debt crisis impacted sales on the continent and in the US.

Fund managers in the stock include Nick Train, manager of the £333m Lindsell Train UK Equity fund, who said recently Amazon's Kindle Fire, the tablet computer launched to rival Apple's iPad, was the most important development in equity markets towards the end of the last year, as opposed to the eurozone crisis.

He said: "We have been saying to shareholders and potential investors we think far and away the most important news development in Q3 2011 had nothing to do with Greece or the euro. From our perspective the most important development was Amazon's Kindle Fire.

"At the most generalised and abstract level of analysis, what these devices will do is lead to a prodigious saving of time. All other things being equal, that sort of gain should generate more economic growth and activity."

Amazon did not disclose how many Kindles it sold in the fourth quarter but research, according to the FT, shows it was around the five million mark, implying other segments of the business are dragging down sales.

Rathbones' James Thomson, manager of the £135m Rathbone Global Opportunities fund, also holds Amazon, as does the Polar Capital Technology Trust, run by Ben Rogoff.