UPDATE, 2:43 PM: The company could add as much as $40 to the current $79 annual fee, CFO Tom Szkutak told analysts in a conference call to discuss earnings. While no decisions have been made, he and other execs say that the current price has been in place for nine years. Over that time delivery and other costs have risen.
PREVIOUS, 1:11 PM: Maybe Amazon will need its drones because the Q4 earnings report it just released failed to deliver, at least as measured by Wall Street’s optimistic expectations. The stock price is down 9%+ in post-market trading after the e-retailer reported net income of $239M, up 146% vs last year’s Q4, on revenues of $25.6B, +20.3%. That missed analysts’ target for revenues of $26.1B. Earnings at 51 cents a share also fell short of predictions for 66 cents. It looks like Amazon’s electronics sales were hit harder than many anticipated from the holiday season price war waged by Best Buy and big box retailers including Wal-mart. Sales in the electronics and general merchandise category were up 23%, a slower pace than last year’s 28%. Media sales grew 11% worldwide, up from 8% last year, and in North America they rose +21%, up from 13%. The company says that it had a “record setting holiday season” for Amazon Prime, the $79 a year service that wipes out delivery charges for many … Read More »
The stock fell at least 4% in after hours trading moments after the e-retail giant announced its results — but have rebounded to +6.7%. The company generated net income of $97M in the quarter, down 45% vs the same period last year, on revenues of $21.27B, +22%. Analysts expected revenues to come in higher, at $22.26B. Earnings of 21 cents a share also were short of forecasts for 29 cents. Amazon pointed to strong sales for its Kindle e-readers and tablets. The Kindle Fire HD, Kindle Fire, Kindle Paperwhile, and Kindle were the top-selling products worldwide since they were launched. “We’re now seeing the transition we’ve been expecting,” CEO Jeff Bezos says. “After 5 years eBooks is a multi-billion dollar category for us and growing fast — up approximately 70% last year. In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5%.” Media generated $6.51B in sales, +8.4%, while electronics and general merchandise sales came in at $13.93B, +27.7%.
Investors don’t always demand that companies favor short term results over business-building investments. Just look at what’s happening at Amazon. This evening the company reported Q2 results that would chill most execs. Net income came in at $7M, down 96% from the period last year, on revenues of $12.8B, +29%. The revenue figure missed analysts forecasts for $12.9B. And earnings at a penny a share were below expectations for two pennies. It’s not a blip. Amazon says it expects operating losses in Q3 of as much as $350M vs an operating profit last year of $79M. What did that do to Amazon’s stock? It’s up about 1% after hours. The reason seems to be that investors believe in CEO Jeff Bezos’ story — including that his spending now on additional fulfillment centers, the Kindle Fire tablets and content for Amazon’s streaming services will enable it to become a major force in media as well as retailing. Instead of commenting on his financials, Bezos’ statement on the company earnings report hawked his Amazon Prime $79 a year membership program. He says it’s “the best bargain in the history of shopping – that is not hyperbole.” (Of course it is, but let’s not quibble.) In addition to providing two-day, free shipping for many Amazon items, it offers members opportunities to stream 18,000 movies and TV episodes, and a Kindle lending library with 170,000 titles. Amazon shares are +27% so far in 2012, … Read More »
Amazon startled investors last night with its report of a huge 3Q profit miss. The stock is off about 11.5% this morning from yesterday’s close of $227.15 before the announcement. But analysts are taking the disclosure in stride, saying that Amazon’s just going through some growing pains while CEO Jeff Bezos awaits a huge inflow of cash from sales of the company’s new Kindle Fire tablet. RBC Capital Markets analyst Ross Sandler maintained his “outperform” recommendation on the stock, although he trimmed the target price to $240 from $265. “We view these quarterly pullbacks as good opportunities to add to (investment) positions, and see the upcoming Kindle Fire product launch as the next catalyst that should allow for revenue upside in 2012,” he says. Credit Suisse’s Spencer Wang also trimmed his target, to $200 from $210, yet maintained his “neutral” position on Amazon. He considers it a “core holding in the sector” but urges investors to wait for ”a more attractive entry point.” Read More »
The online retailer ended up with net profits of 14 cents a share — a far cry from the 24 cents that the Street expected. The company reported net income of $63M, down 72.7% vs last year’s 3Q, on revenues of $10.9B, up 43.9%. And Amazon says that in 4Q it could deliver anything from a $200M operating loss to a $250M operating profit. Confused? So are a lot of analysts, judging by the questions they asked in Amazon’s earnings call. The company didn’t even try to explain the lousy 3Q results in its press release. But the big surprise seems to be how much Amazon had to spend, in large part for new fulfillment centers and to prepare for the recent release of its Kindle Fire tablet. CEO Jeff Bezos says that orders for the device are so strong that the company plans to make “millions more” than it planned.