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AMZN's Miss: No Big Deal

NEW YORK ( TheStreet) - Amazon (AMZN - Get Report) shares dropped 8.9% to $177.14 on Wednesday after fourth-quarter revenue expectations came in lighter than expected. Although revenue grew 35% to $17.43 billion, analysts were looking for $18.25 billion.

The revenue miss sparked questions about whether Amazon's large investments in its Kindle Fire tablet and warehouses are actually paying off.

But during a conference call with analysts, Amazon Chief Financial Officer Tom Szkutak defended the company's practice of continued heavy investing and said it has no plans to change its strategy.

"There's a lot of interesting opportunities we continue to invest in," he said.

Rather than focusing on short-term quarterly results and Wall Street projections, Seattle-based Amazon is more concerned with investing in products that will pay off five to ten years down the line.

Analysts still remain largely bullish on the stock's long term prospects, despite skepticism from spooked investors who rushed to sell shares following the company's earnings.

"We think we could see some further weakness in Amazon shares in the very near term, but we'd be taking advantage of further pull-backs as buying opportunities," J.P. Morgan analyst Doug Anmuth wrote in a note to clients. "We're encouraged by the overall unit growth and potential gross merchandise volume numbers, which we believe are strong gauges of Amazon's success." Gross merchandise volume is the value of all merchandise sold across Amazon and its marketplaces.

As the company shifts from its role as an online bookseller to a technology and entertainment provider, it is upping its investment in hardware, infrastructure and digital content.

Amazon is also taking a small loss on the sale of every Kindle Fire device, with the hope that the intention of making this money back later through the sale of content like movies, TV shows and books to the tablet.

During the fourth quarter, Amazon spent $862 million on technology and content, up 66% from the same period last year.

Fulfillment costs also grew 52% to $1.6 billion as the company invests in new warehouses to boost revenue growth.

"We reiterate our buy investment rating on shares of, and believe that the pullback in the stock presents an opportunity for growth-oriented investors looking for the ecommerce leader to resume to operating profit dollar growth in 2H 2012," wrote Deutsche Bank analyst Jeetil Patel.

--Written by Olivia Oran in New York.

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