Amazon.com (AMZN): Q1 EPS of $0.18 beats by $0.09. Revenue of $16.07B (+22% Y/Y) misses by $90M. Expects Q2 revenue of $14.5B-$16.2B vs. $15.9B consensus. Expects Q2 operating income of -$340M to +$10M; EPS consensus is at $0.22. Shares +1.4% AH. CC at 5PM ET (webcast). (PR) [View news story]
Rick, not only that, when you dive into the numbers a big chunk of the earnings was because of a tax credit, not because of operations. Amazon is an internet era bubble stock, a bubble inflated with poop, that is going to burst and when it happens it isn't going to be pretty. It's going to smell bad too. Amazon long investors need to purchase hazmat suits; I'm sure Amazon sells them ;)
Amazon's A Momentum Darling; Here's 12 Reasons That Momentum May End [View article]
Mark, I think you're right about the investment community. It's clear the investment community has decided to pump Amazon just as it has decided to dump Apple. Look at the last several quarterly reports of Amazon. Big misses on earnings, revenue, revenue growth, and guidance. Yet after each report Amazon popped because analysts "found" other metrics to focus on that put Amazon in a better light. Despite the misses investment houses raised their price targets, name one other company where that has happened-three quarters in a row of earnings, revenue, and revenue growth misses and lowered guidance resulting in higher price targets. It boggles the mind and is quite extraordinary.
Amazon (AMZN) CEO Jeff Bezos issues his annual letter to shareholders in which he takes on accusations the company is being run as a "charitable" organization for the benefit of consumers by noting customer trust and brand reputation will continue to outweigh short-term swings in Amazon's share price. The Bezos strategy: "I think long-term thinking squares the circle." (full Amazon letter .pdf) [View news story]
"I think long-term thinking squares the circle."
I have no idea what this means, it is utter nonsense. Bezos knows it is babble speak and has to laugh that no one will call him out on it. What ever happened to speaking in plain English? I guess if Bezos says it people are supposed to think it must be brilliant. I think it's double talk at best, a practical joke at worst.
Apple: Major Concerns Overstated And More Than Priced In [View article]
I've been long Apple for several years now and I've been really pissed lately by the performance of Apple stock especially compared to Amazon given the fundamentals of the two companies. Finally, I've come to accept reality though, especially given the last few days. Apple is a classic example of a great company with a butt ugly stock; Amazon is a classic example of a butt ugly company with a great stock. It looks like Apple is going to break $400 before the week is out barring news on a dividend hike or some other miracle.
Pricing power and Amazon in the same sentence, please! Amazon cannot raise prices without losing revenue/market share. Amazon has the opposite of pricing power; it is forced to price lower than the competition, often at a loss to maintain a competitive advantage, Kindle Fire pricing is an example. This is a major factor why Amazon doesn't earn any money to speak of. Companies with pricing power usually have high margins and earn gobs of money, like Apple, Samsung, Google etc.
Meet The Latest Threat To Apple: The Samsung Galaxy S4 [View article]
Michael, you're right on the reliability issue. A recent survey showed Apple's iPhones to be 3 times as reliable as Samsung's phones. That's a pretty huge disparity. Link follows:
ChannelAdvisor Predicts Direction Of Amazon Revenue Growth 100% Of The Time [View article]
Interestingly, today (14 March) JP Morgan downgraded Amazon. They brought down future earnings estimates a little, I think even the lowered estimates are way too high, but the downgrade is a crack in Amazon's teflon shell that could grow wider. Amazon is down $7 at 1045.
ChannelAdvisor Predicts Direction Of Amazon Revenue Growth 100% Of The Time [View article]
Paulo, you've nailed it again. When the most recent Channel Advisor survey came out most of the articles/analysts in the mainstream media that addressed it relative to Amazon regarded it as good news for Amazon, so Amazon popped a few dollars. It kind of goes along with your Morgan Stanley article. These analysts are either incompetent or are duplicitous. They go out of the their way to interpret news in a positive fashion to pump Amazon higher and higher despite the reality that the news was really negative. I can't believe that Morgan Stanley or one of the other big investment houses could not replicate your analysis, they just didn't want to. They have an agenda and negative news on Amazon doesn't fit it.
Amazon Without High Profits Is Overvalued [View article]
Michael, that's not the only area that Amazon is treated deferentially. Do that search on companies with over a $100 billion market cap and you will also find that no other company in that group lost money for 2012. No other company in that group had declining year over year earnings for the last 8 quarters in a row. In the past, except for the internet bubble years, companies that recorded 8 consecutive quarters of year over year earnings declines saw their stock price severely punished but Amazon's stock price achieved new highs. Amazon is the only $100 billion, $50 billion, or $10 billion company that Wall St. has granted an exemption from earning money. Other companies that grew their revenue/businesses like Walmart and Target had to simultaneously grow earnings, and they did. Why shouldn't Amazon be held to the same standard as other mega cap companies?
Is Amazon A Giant Ponzi Scheme Dressed In Drag? [View article]
" Compared to any company that has to maintain a lot of retail storefronts they do have a built in cost advantage, if they can take advantage of it."
Hi NWCorner. I think the view that you expressed here is widely believed and has been Amazon's theme song for 15 years. On the face of it there seems there should be validity to the theory but what it doesn't take into account is the disadvantage that Amazon faces in shipping costs compared to it's brick and mortar competition. It is a given that Walmart, Target, and Costco all have much higher net margins than Amazon despite their brick and mortar. One of the main reasons is the economies of scale those companies have by shipping in bulk to their stores vs the inefficient delivery mechanism used by Amazon to ship even small items directly to the home. Amazon's shipping costs are substantial especially for Prime customers; the $79 annual fee is a huge money loser. I believe shipping costs are a key reason why Amazon's large cap brick and mortar competitors are much more profitable than Amazon. My concern with Amazon is that they have shown that they can sell a lot of product, they have expanded into a lot of businesses and are moving into more, but they haven't shown that they can make a decent profit. Amazon is great for it's customers, it just doesn't appear to be a great business for making money. At some point Amazon needs to show it can make enough money to warrant it's huge stock price. Growth prospects have to include earnings growth, not just revenue growth, yet Amazon hasn't shown that it can grow earnings. In fact the contrary is true as Amazon's earnings have declined significantly for a couple of years culminating in a loss for all of 2012 despite much higher revenue. I'll believe in the Amazon business model when they can show me the money, until then I remain skeptical. Happy investing.
Is Amazon A Giant Ponzi Scheme Dressed In Drag? [View article]
Dave, excellent analysis. Your objective reasoned analysis and that of Paulo Santos and Timothy Phillips point out the disingenuous "analysis" of major Wall St. investment houses like Morgan Stanley that intentionally ignore negative issues regarding Amazon in their fervor to pump the stock price. That Amazon is making new highs while it's fundamentals are deteriorating significantly is bizarre, especially given it's $120 billion market cap and how the market drove Apple to 52 week lows despite much better numbers and huge record earnings. I can't imagine any other mega cap stock with similar numbers to Amazon being treated the same way the Street has treated Amazon; any other mega cap would have seen it's stock eviscerated. At some point this Ponzi scheme will come to an end, the only question is when.
Apple: Learn From Andy Zaky's Mistake [View article]
Jacob, I think you hit the nail on the head. From 2010 thru 2012 Apple showed phenomenal revenue and earnings growth but the P/E never reflected that. That's partly because analysts consistently underestimated the next years expected growth by significant margins. They typically came out with numbers between 18% and 20% which Apple blew away. Apple's growth was over 60%, yet it's P/E was only around the average of the S&P 500. Contrast that with Amazon, from 2010 thru 2012 analysts consistently over estimated Amazon's future earnings by huge margins driving the stock to new highs and P/E ratios that were huge. For example, just a couple of years ago Amazon was predicted to earn over $5 for 2012, a year in which they lost money. If ever there was a stock that exhibited "extreme bullishness" it is Amazon, not Apple.
The Massive Underperformance Of Apple Vs. Amazon [View article]
For several years I've been totally amazed at how the market has under appreciated and under valued Apple given it's amazing revenue and earnings growth. Between 2008 and 2012 Apple showed phenomenal growth numbers well beyond the S&P 500 average, yet it never attained the higher P/E that such growth warranted. However, as soon as signs of slowing growth emerged, the stock was knocked down as if it had been at a much higher P/E instead of just an average P/E. The result is the imbalance Paulo has pointed out with Amazon and even stocks like Dell. Today, believe it or not, even Dell has a higher P/E than Apple! Who would guess that a company would report the best earnings by any non-oil and gas company in the history of Wall St. and get so punished while Amazon would lose money for the year and make new highs. Truly bewildering.
Amazon.com Media Revenue Growth Will Probably Turn Negative [View article]
Paulo, I posted the following on an article authored yesterday by Carol Wong:
Carol, Amazon's moat is about to get smaller. Google is making a move that might put a huge hurt on Amazon and other on line retailers. They're building a same day delivery shopping service called "Google Shopping Express" that reportedly will be priced $10-$15 cheaper than Amazon Prime's $79 fee. The link is below:
I'd be interested in your views regarding this move by Google. Amazon is already losing money on Prime at $79, will this cause them to drop that fee or will they just lose market share to Google? Either way, I think this spells bad news for Amazon and will hinder revenue and earnings growth.
Amazon.com (AMZN): Q1 EPS of $0.18 beats by $0.09. Revenue of $16.07B (+22% Y/Y) misses by $90M. Expects Q2 revenue of $14.5B-$16.2B vs. $15.9B consensus. Expects Q2 operating income of -$340M to +$10M; EPS consensus is at $0.22. Shares +1.4% AH. CC at 5PM ET (webcast). (PR) [View news story]
Amazon's A Momentum Darling; Here's 12 Reasons That Momentum May End [View article]
Amazon (AMZN) CEO Jeff Bezos issues his annual letter to shareholders in which he takes on accusations the company is being run as a "charitable" organization for the benefit of consumers by noting customer trust and brand reputation will continue to outweigh short-term swings in Amazon's share price. The Bezos strategy: "I think long-term thinking squares the circle." (full Amazon letter .pdf) [View news story]
I have no idea what this means, it is utter nonsense. Bezos knows it is babble speak and has to laugh that no one will call him out on it. What ever happened to speaking in plain English? I guess if Bezos says it people are supposed to think it must be brilliant. I think it's double talk at best, a practical joke at worst.
Apple: Major Concerns Overstated And More Than Priced In [View article]
Morgan Stanley selects 20 stocks for the long term, based on "competitive advantages, business model, pricing power, cost efficiency and growth": AMZN, AMT, BLK, CPN, CP, CVX, COST, EL, GILD, HON, JPM, LTD, MON, NWSA, PM, RPM, SBUX, SYMC, TMO, WMB. [View news story]
Meet The Latest Threat To Apple: The Samsung Galaxy S4 [View article]
http://bit.ly/Wi6uWO
ChannelAdvisor Predicts Direction Of Amazon Revenue Growth 100% Of The Time [View article]
ChannelAdvisor Predicts Direction Of Amazon Revenue Growth 100% Of The Time [View article]
Amazon Without High Profits Is Overvalued [View article]
Is Amazon A Giant Ponzi Scheme Dressed In Drag? [View article]
Hi NWCorner. I think the view that you expressed here is widely believed and has been Amazon's theme song for 15 years. On the face of it there seems there should be validity to the theory but what it doesn't take into account is the disadvantage that Amazon faces in shipping costs compared to it's brick and mortar competition. It is a given that Walmart, Target, and Costco all have much higher net margins than Amazon despite their brick and mortar. One of the main reasons is the economies of scale those companies have by shipping in bulk to their stores vs the inefficient delivery mechanism used by Amazon to ship even small items directly to the home. Amazon's shipping costs are substantial especially for Prime customers; the $79 annual fee is a huge money loser. I believe shipping costs are a key reason why Amazon's large cap brick and mortar competitors are much more profitable than Amazon. My concern with Amazon is that they have shown that they can sell a lot of product, they have expanded into a lot of businesses and are moving into more, but they haven't shown that they can make a decent profit. Amazon is great for it's customers, it just doesn't appear to be a great business for making money. At some point Amazon needs to show it can make enough money to warrant it's huge stock price. Growth prospects have to include earnings growth, not just revenue growth, yet Amazon hasn't shown that it can grow earnings. In fact the contrary is true as Amazon's earnings have declined significantly for a couple of years culminating in a loss for all of 2012 despite much higher revenue. I'll believe in the Amazon business model when they can show me the money, until then I remain skeptical. Happy investing.
Is Amazon A Giant Ponzi Scheme Dressed In Drag? [View article]
Apple: Learn From Andy Zaky's Mistake [View article]
The Massive Underperformance Of Apple Vs. Amazon [View article]
Amazon.com Media Revenue Growth Will Probably Turn Negative [View article]
Amazon.com Media Revenue Growth Will Probably Turn Negative [View article]
Carol, Amazon's moat is about to get smaller. Google is making a move that might put a huge hurt on Amazon and other on line retailers. They're building a same day delivery shopping service called "Google Shopping Express" that reportedly will be priced $10-$15 cheaper than Amazon Prime's $79 fee. The link is below:
http://seekingalpha.co...
I'd be interested in your views regarding this move by Google. Amazon is already losing money on Prime at $79, will this cause them to drop that fee or will they just lose market share to Google? Either way, I think this spells bad news for Amazon and will hinder revenue and earnings growth.