Amazon: Strong Q3, Outlook, But Margin Worries Emerge

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 |  About: Amazon.com, Inc. (AMZN)
by: Larry Dignan

Amazon’s third quarter topped projections and the company’s fourth quarter revenue outlook is better than expected. Amazon’s fourth quarter operating profits, however, look light.

The company reported net income of $231 million, or 51 cents a share, on revenue of $7.56 billion, up from $5.45 billion a year ago (statement). Wall Street was expecting earnings of 48 cents a share on revenue of $7.36 billion.

Meanwhile, the company also delivered a healthy fourth quarter outlook. Amazon (NASDAQ:AMZN) projected revenue of $12 billion to $13.3 billion. That’s a wide range, but Wall Street was expecting fourth quarter sales of $12.3 billion. Amazon’s mid-point of that range is well above expectations. Amazon also said it expected operating income of $360 million to $560 million. That outlook is below the $615 million in operating profit expected by Wall Street.

That outlook sent shares lower a bit afterhours on concerns that margins would be lower than expected. Then again, Amazon shares surged 33 percent or so leading up to the earnings report.

Here’s a look at Amazon’s third quarter by the numbers:

  • Amazon said that its latest Kindle is the fastest selling device in its history and is outpacing previous generations.
  • The Kindle store includes 720,000 books.
  • Sales in North America were $4.13 billion, up 45 percent from a year ago. International sales were $3.43 billion, up 32 percent from a year ago.
  • Media sales were $3.35 billion, up 14 percent from a year ago. Electronics sales were $3.97 billion, up 68 percent.

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