Two technology giants were being slapped around by Wall Street in early trading on Friday after reporting quarterly results that disappointed investors for different reasons. Amazon.com (NASDQ: AMZN) were trading at 169, down 8.4 percent, shortly before noon. Despite reporting impressive revenue growth of 36 percent in its fourth quarter and an 8 percent increase in profits, Amazon's operating margin of 3.8 percent was well below consensus expectations of 4.2 percent. (Also see: Microsoft shares down on lower fiscal Q2 profit) Worse, from the perspective of investors, Amazon forecast operating margins for the current quarter to be in the range of 2.9 percent and 3.9 percent, way off from the 5 percent margin anticipated by analysts. Amazon CFO Tom Szkutak said in an earnings conference call Thursday that the company is investing heavily in new fulfillment centers in order to efficiently handle the increasing volume of product orders from its retail web site. "I'm very pleased with the investments we're making and we've shown over our history that we've been able to make great returns on the capital we invest in," he said. For now, at least, investors appear somewhat less pleased. It's fair to assume that part of Wall Street's strong negative reaction stems in part from the fact that Amazon shares have been trading near historic levels. Thursday's closing price of 184.45 is not far below the all-time high of 191.60 set on Jan. 18. So there was plenty of room for downward movement. Meanwhile, Microsoft shares (NASDAQ: MSFT) were down 3.9 percent to 27.74 after the software giant reported fiscal second-quarter profits of $6.63 billion, or 77 cents a share, down from $6.66 billion, or 74 cents a share, in the year-ago quarter. Revenue was up 5 percent to $19.95 billion from $19 billion a year ago. Both Q2 numbers beat expectations of 68 cents a share on revenue of $19.2 billion. While revenue for Redmond's entertainment and devices division soared 55 percent to $3.7 billion from $2.4 billion in the year-ago quarter -- thanks to the sale of 8 million Kinect motion-sensor video game devices over the holiday season -- its flagship Windows unit disappointed. Sales fell to $5.1 billion from $7.2 billion, a 29 percent drop, while net income from Windows sales was down 39 percent, to $3.3 billion from $5.4 billion. Unlike Amazon's stock, however, Microsoft shares are nowhere near all-time highs. With just a few exceptions, Redmond's stock has been stuck in the mid to upper 20s for the better part of a decade, frustrating shareholders who want to see the kind of stock-price growth experienced by companies such as Apple and Amazon.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.