pick_up_the_pieces

3 Comments

    • Amazon: Transitioning Into a Technology and 'Cloud Services' Company [view article]
      "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...       Jul 25 11:26 AM
    • Wall Street Breakfast: Must-Know News [view article]
      www.ft.com/cms/s/0/8e0...

      www.bloomberg.com/apps...       Jul 24 04:41 PM
    • 5 Key Quotes from Amazon on the E-Commerce Industry [view article]

      In the earnings press release from Amazon.com today, Amazon included a $53 million one-time non-cash gain as "operating earnings" for their reported FY08 Q3, thus increasing their reported earnings per share for the reported quarter. Although I am not an accountant, this does not seem legitimate.

      Making this seem even more suspect (to me), is the fact that when asked by analyst Scott Devitt of Stifel Nicolaus during the subsequent conference call, Amazon stated that they are excluding said $53 million one-time non-cash charge in their full-year "operating-earnin... guidance. Is this acceptable?

      Can they use a one-time non-cash gain as operating earnings one place, but not another?

      Can they use a one-time non-cash gain as operating earnings--at all ??

      Sounds like Amazon, in effect, pulled a rabbit out of a hat to "make" their quarter, and please the Wall Street community. I can't imaging this is an acceptable, forthright nor an honest accounting practice. It may be even sneaky.

      "Operator"

      Your next question comes from the line of Scott Devitt – Stifel Nicolaus

      Scott Devitt – Stifel Nicolaus

      As it relates to the guidance and the change for the guidance last quarter you gave full year GAAP operating income guidance $740 to $940 and the GAAP operating income this quarter was I believe $57 million above expectations including the $53 million gain so I’m trying to get my hands around the updated guidance which is mostly unchanged from the prior GAAP operating income guidance and whether this new guidance includes or excludes the $53 million gain.

      Thomas Szkutak

      Yes, the GAAP, the guidance excludes the $53 million gain."       Jul 24 03:00 AM
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