Amazon: Another Killer Quarter

Amazon Inc. shares climbed over 21% in AH trading after it said Tuesday Q2 net income skyrocketed 255% to $78 million ($0.19/share), up from $22 million ($0.05) a year ago -- beating average analyst estimates of $0.16. Net sales were up 35% to $289 billion, $85 million higher than estimates. Amazon boosted sales of electronics and jewelry, which now comprise about a third of its total sales, in its effort to reduce its dependence on books and DVDs. It has also cut back on costs: CFO Thomas Szkutak said in March that Amazon would cut back on technology spending after its profit margin fell to the lowest level since 1999. Wall Street has been impressed with the results: Amazon shares are up 75% since Q1 earnings showed improved profit margins and spending reductions. As of Monday's close, its shares commanded a hefty 52x 2008e earnings, vs. 21x for eBay and 14x for brick-and-mortar retailer Wal-Mart. Amazon gave Q3 guidance of $75-100M operating income (88-175% growth) and net sales of $3-3.175B (30-38% growth). For the full year, Amazon raised its forecast to $13.80-14.30B, up from $13.4-14B. The Street had been looking for $3B on the quarter and $13.84B on the year. "Our strong revenue growth this quarter was fueled by low prices and the added convenience of Amazon Prime," said Jeff Bezos, CEO and founder. Amazon will hold its earnings conference call at 5 p.m. ET (check later for full transcript).

Sources: Press release, Bloomberg, Reuters, AP
Commentary: Amazon Reports Earnings Tuesday: Will It See Christmas In July? • Amazon Reports Earnings Tuesday: Will It See Christmas In July? • The Long and Short on Amazon, Netflix, Google, Microsoft And Apple
Stocks/ETFs to watch: Amazon.com Inc. (AMZN). Competitors: Barnes & Noble Inc. (BKS), eBay Inc. (EBAY). ETFs: First Trust DJ Internet Index ETF (FDN), Internet HOLDRS (HHH), streetTRACKS Morgan Stanley Technology Index Fund (MTK)

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Comments

[Long-Short Guy:]

Amazon has started showing ads on its product pages -- they probably don't account for much revenue, but are 100% margin. I'd be interested to hear on the call how much profit and margin basis points that added.

2007 Jul 24 05:20 PM

[Long-Short Guy:]

BTW, these write ups are outstanding: all the key info in the shortest possible number of words. You're doing a fantastic job.

2007 Jul 24 05:22 PM

[Andrew Hor...:]

Awesome quarter. Congrats.. AMZN...How are the analysts so far off on this one, 2 quarters in a row? Hmmmm.....

2007 Jul 24 07:27 PM