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Amazon.com (AMZN): Q3 EPS of $0.45 beats by $0.12. Revenue of $5.5B (+28%) vs. $5B. Sees Q4...

Amazon.com (AMZN): Q3 EPS of $0.45 beats by $0.12. Revenue of $5.5B (+28%) vs. $5B. Sees Q4 sales of $8.125B-9.125B vs. consensus of $8.11B. Shares +9.5% AH. (PR)
Comments (8)
  • SA Editor Eli Hoffmann
    , contributor
    Comments (695) | Send Message
     
    Here's AMZN's earnings release:

     

    phx.corporate-ir.net/p...

     

    SEATTLE--(BUSINESS WIRE)--Oct. 22, 2009-- Amazon.com, Inc. (NASDAQ:AMZN) today announced financial results for its third quarter ended September 30, 2009.

     

    Operating cash flow was $2.25 billion for the trailing twelve months, compared with $1.27 billion for the trailing twelve months ended September 30, 2008. Free cash flow increased 98% to $1.92 billion for the trailing twelve months, compared with $0.97 billion for the trailing twelve months ended September 30, 2008.

     

    Common shares outstanding plus shares underlying stock-based awards outstanding totaled 451 million on September 30, 2009, compared with 448 million a year ago.

     

    Net sales increased 28% to $5.45 billion in the third quarter, compared with $4.26 billion in third quarter 2008. Excluding the $41 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 29% compared with third quarter 2008.

     

    Operating income increased 62% to $251 million in the third quarter, compared with $154 million in third quarter 2008. Excluding the $10 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, operating income would have grown 69% compared with third quarter 2008.

     

    Net income increased 68% to $199 million in the third quarter, or $0.45 per diluted share, compared with net income of $118 million, or $0.27 per diluted share, in third quarter 2008.

     

    “Kindle has become the #1 bestselling item by both unit sales and dollars – not just in our electronics store but across all product categories on Amazon.com. It’s also the most wished for and the most gifted. We are grateful for and energized by this customer response,” said Jeff Bezos, founder and CEO of Amazon.com. “Earlier this week we began shipping the latest generation Kindle. Its 3G wireless works in the U.S. and 100 countries, and we’ve just lowered its price to $259.”

     

    Highlights

     

    * This week we started shipping Kindle with U.S. & International Wireless and lowered its price to $259 from $279. This newest Kindle is available to ship to customers living outside the U.S. Customers in more than 100 countries around the world, and U.S. customers traveling abroad, can take advantage of Kindle’s 3G wireless technology to download a title in 60 seconds or less.
    * The U.S. Kindle Store now has more than 360,000 books, including 101 of 112 New York Times Bestsellers, more than 7,000 blogs, and more than 90 top U.S. and International newspapers and magazines, including: The New York Times, The Wall Street Journal, The Times (U.K.), Le Monde, The Economist, Newsweek, Time, and Fortune. Kindle owners can also select from over 60,000 audiobooks from Audible.com and listen to them directly on their Kindle.
    * The Company announced “Kindle for PC,” the free application for reading Kindle books on the PC. Kindle for PC features Amazon’s Whispersync technology, which automatically saves and synchronizes customers’ bookmarks and last page read across devices, including the Kindle, Kindle DX, iPhone, iPod touch, and PC.
    * North America segment sales, representing the Company’s U.S. and Canadian sites, were $2.84 billion, up 23% from third quarter 2008.
    * International segment sales, representing the Company’s U.K., German, Japanese, French and Chinese sites, were $2.61 billion, up 33% from third quarter 2008. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, International sales grew 35%.
    * Worldwide Media sales grew 17% to $2.93 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter sales grew 18%.
    * Worldwide Electronics & Other General Merchandise sales grew 44% to $2.36 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter sales grew 45%.
    * Amazon.com launched “Local Express Delivery,” a new shipping option giving customers same-day delivery on thousands of items in seven major cities: New York, Philadelphia, Boston, Baltimore, Las Vegas, Seattle and Washington D.C. Amazon Prime members pay just $5.99 per item for the service.
    * The Company continues to expand and enhance free shipping offers across the world. Amazon.co.uk began offering free shipping on all products in the U.K., eliminating the prior threshold of £5; while Amazon.co.jp now offers free same-day delivery service to Amazon Prime customers in the Kanto and Kansai regions of Japan.
    * Items shipped on behalf of sellers who utilized Fulfillment by Amazon (FBA) more than tripled from the prior year. Sellers can still join FBA and take advantage of Amazon’s extended delivery promise for the holidays − customers can order items as late as December 23rd and still get them in time for the holidays.
    * Amazon.com expanded its Frustration-Free Packaging program, offering additional items from Fisher-Price, Mattel, Kingston and other leading toy and electronics manufacturers in easy-to-open, environmentally friendly packaging.
    * Amazon Web Services (AWS) launched Amazon Virtual Private Cloud (Amazon VPC), a secure and seamless bridge between a company’s existing IT infrastructure and the AWS cloud, enabling enterprises to connect their existing infrastructure to AWS compute resources.

     

    Financial Guidance

     

    The following forward-looking statements reflect Amazon.com’s expectations as of October 22, 2009. This guidance excludes the impact of Zappos.com, Inc., including approximately $35 million of expenses primarily related to employee compensation costs, amortization of intangibles and merger-related expenses that would be recognized in the fourth quarter 2009 if the transaction closes as planned. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce and the various factors detailed below.

     

    Fourth Quarter 2009 Guidance

     

    * Net sales are expected to be between $8.125 billion and $9.125 billion, or to grow between 21% and 36% compared with fourth quarter 2008.
    * Operating income is expected to be between $300 million and $425 million, or to grow between 10% and 56% compared with fourth quarter 2008. This guidance includes approximately $100 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions or investments are concluded and that there are no further revisions to stock-based compensation estimates.
    22 Oct 2009, 04:15 PM Reply Like
  • FocalPoint Analytics
    , contributor
    Comments (5803) | Send Message
     
    Thank you for the information Eli.
    22 Oct 2009, 04:22 PM Reply Like
  • Angel Martin
    , contributor
    Comments (1291) | Send Message
     
    Another high multiple tech company with year-over-year increases in revenues and profits. High multiple tech companies lead the cycle.

     

    Doomsters take note.
    22 Oct 2009, 04:23 PM Reply Like
  • bricki
    , contributor
    Comments (1099) | Send Message
     
    Amazon and its brethren are beneficiaries of a fundamental innovation that is supporting secular change in our social institutions. Online shopping is just a small part of this.

     

    It is quite important for policy makers to realize that technology innovation is one of the key engines for real growth (rather than financial manipulation which is an engine of faux growth).
    22 Oct 2009, 04:36 PM Reply Like
  • elliotz
    , contributor
    Comments (251) | Send Message
     
    Good quarter for Amazon, but i think the quarter was mostly made by Kindle sales. There were not competitors to the Kindle during the quarter. Now B&N is coming out with their own E-reader and others will follow suite. I also think the price wars with Wall Mart and Wall Marts agresive move into online retail do not boade well for Amazon. After reading the report I will most likely begin to build a short position in Amazon. I think the valuations are insane showing that investors are excepting alot from AMZN and i do not know if medium term it can live up to those excpectations.
    22 Oct 2009, 04:37 PM Reply Like
  • AuContrarian
    , contributor
    Comments (36) | Send Message
     
    Two important points:

     

    First: AMZN is the Walmart of online, the true proxy for consumer spending. The after hours up 14% shows that the Street was wrong about spending in the quarter.

     

    Second, AMZN is poised to crush as the economy gets better. Besides being the world's company store, it's Kindle will crush Barnes & Noble, and likely lock down the reader market, because readers like convenience.
    22 Oct 2009, 05:45 PM Reply Like
  • Mycroft
    , contributor
    Comments (648) | Send Message
     
    I have been trying to buy Amazon (AMZN) for five years now, but because I only buy companies that have a price to free cash flow of 15 or less, I was hoping they were going to miss and allow me to finally get in, but alas they blew away the quarter and I am going to have to wait again. With their increase in TTM Free Cash Flow to $1.92 Billion, my buy price has now moved up to $63.85.

     

    I am so impressed with their results that I will probably have to up my purchase rule up and add some more risk, by bumping my buy price to 20 times free cash flow and look for an entry point of $85 a share. My sell criteria is 30 times free cash flow or $127.50, so if I ever get lucky enough to get in at $85, I will have a long way to go before I will need to sell.

     

    People will probably say I am crazy and Amazon will not get back to $85 anytime soon, but they said the same thing about Coach (COH) , which not only went down to 15 times free cash flow but then proceeded all the way down to 7.52 times. I learned a long time ago for observing warren Buffett’s purchases, that you have to set your price and wait (sometimes for a long time) until the stock hits that price. It took me seven years to buy Coach, but I got it!

     

    Amazon has a Free Cash Flow Return on Invested Capital (FROIC) of 42%, which for those who don’t know what that means, it’s simply for every $1 of capital employed Amazon generates $42 cents in free cash flow. Those are amazing numbers as I like to usually buy companies with 20%+ FROIC. It’s main bricks and mortar competitor Wal-Mart (WMT) for example has a FROIC of just 8 while having a Price to Free Cash Flow of 23. So for every $1 of Capital Amazon employees they return 525% more free cash flow that Wal-Mart. And as for Barnes and Noble (BKS)they are no threat as they have of FROIC of 8.25%.

     

    There is only one game in town and that is Amazon, So please fall to $85 so I can get some of your stock.

     

    Disclosure; Long COH, no positions in WMT, AMZN, BKS

     

    The Fine Print: As Registered Investment Advisors, we see it as our responsibility to advise the following: We do not know your personal financial situation, so the information contained in this communiqué represents the opinions of Mycroft Research, and should not be construed as personalized investment advice.

     

    It should not be assumed that investing in any securities we are investing in will always be profitable. We take our research seriously, we do our best to get it right, and we “eat our own cooking,” but we could be wrong, hence our full disclosure as to whether we own or are buying the investments we write about.
    22 Oct 2009, 08:21 PM Reply Like
  • rick12345
    , contributor
    Comments (629) | Send Message
     
    Of course the bears will tell you this a temporary glitch brought on by stimulus spending and/or tax rebates to first home buyers.
    I think you are correct about increased competition in the online market though. Now if only retailers are smart enough to capitalize on this opportunity by marketing the channel overseas; Wouldn't that solve some of your problems viz-a-viz consumer spending my American friends? .... Na, makes too much sense.
    23 Oct 2009, 07:33 AM Reply Like
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