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Amazon: Transitioning Into a Technology and 'Cloud Services' Company

"The headlines read “Amazon Earnings Double” "

Oops, is right: AMZN's "real" Q2 EPS:

Excluding the $53 million non-cash gain (as one should), I get 26.3 cents.

Applying the expected 30% tax rate, I get 25.6 cents.

Removing the foreign exchange effect, and it comes down to 23.6 cents.

That is compared to 19 cents for the same quarter 2007. An increase of 23.7%

That's pretty good, sure, but not nearly as impressive as what was reported by both the company and the press. AND, impossible to justify either yesterday's stock price rise, nor the current valuation.

As to DVD transaction itself, that is a curious bird, to be sure, and not exactly as it appears. More of a merger or a transfer than an outright sale (yet they took a $53 million gain, on the sale of a company with a mere $17.5 in annual sales--curious).

The $53 million one-time non-cash gain that allowed Amazon to "beat the number" is from Amazon's selling its DVD business to LOVEFiLM, yet, it looks like Amazon was actually "out of pocket" for the transaction.

www.reuters.com/articl...