Amazon net jumps on strong U.S. sales, stock zooms
|
|
|
By Alexandria SageLOS ANGELES (Reuters) - Amazon.com Inc. posted quarterly net profit on Tuesday that more than tripled, surprising Wall Street as U.S. sales jumped and the company raised its 2007 sales and operating earnings outlook, sending shares up more than 20 percent."It's an amazing performance," said Bernstein Research analyst Jeffrey Lindsay. "A lot of it (growth) seems to have come in the United States, which is particularly surprising since that's considered Amazon's most mature market."Profit margins widened in a good sign for investors concerned that the Web retailer in recent years has focused on sales growth at the expense of earnings.Amazon shares already had surged 55 percent since first-quarter earnings in April showed improved profit margins and pared-back spending. The stock has more than doubled in the last year.Net income in the second quarter rose to $78 million, or 19 cents per share, compared with $22 million, or 5 cents a share, a year earlier. Revenue rose 35 percent to $2.89 billion in the second quarter while North American net sales rose 38 percent, representing the highest growth in six years for that region.Earnings of 19 cents per share topped the Wall Street target of 16 cents, while revenue also beat the $2.8 billion average expectation, according to Reuters Estimates.Chief Financial Officer Tom Szkutak attributed part of the U.S. sales growth to Amazon Prime, a discount shipping program that charges $79 annually for unlimited two-day shipping."Subscribers are increasing, customers are buying more, it's becoming a more meaningful part of our overall units. It's certainly impacting the growth you are seeing this quarter," Szkutak told reporters during a conference call.Third-party business represented 30 percent of worldwide sales in the quarter, Amazon said. With these sales, Amazon takes a transaction commission but avoids inventory and fulfillment issues, thereby increasing profit margins."We think this model of having us as a seller as well as third party is very important for customers and also works for us financially as well," said Szkutak. "It should be a meaningful part of our business moving forward."Operating profit margins, a source of much worry on Wall Street in recent years due to high investment spending, came in at 4 percent of worldwide sales in the quarter, well above the 2.2 percent seen a year earlier, when spending on technology and content was significantly higher.RAISING FULL-YEAR SALES FORECASTFor the third quarter, the company said it expects net sales in a range of $3.0 billion to $3.18 billion, with operating income in a range of $75 million to $110 million.Analysts, on average, have been expecting third-quarter revenue of $3.01 billion, according to Reuters Estimates.Amazon raised its full-year sales forecast to a range of $13.8 billion to $14.3 billion. Previously, the company said it expected a range of $13.4 billion to $14.0 billion. Wall Street, on average, has been expecting revenue of $13.86 billion, according to Reuters Estimates.Operating income for the full-year is now expected to range between $540 million and $640 million, well above an earlier estimate of $463 million to $593 million.But one analyst said that the implied outlook for the fourth quarter, which includes the December holidays, showed sales growth outstripping operating income."What's driving the stock wild is positive operating leverage," said analyst David Garrity of Dinosaur Securities. "What these numbers would appear to indicate ... is that this positive operating leverage dynamic may only have a fairly short runway."But the company could still raise its outlook for the fiscal year and fourth quarter, he added.Amazon shares rose 20.3 percent to $83.28 from a close of $69.25 on Nasdaq.The company is valued well above major Internet players as well as brick-and-mortar retailers. Amazon shares, as of Monday's close, traded at 52 times 2008 expected earnings, compared with 21 times at eBay Inc. , 46 times at Yahoo Inc. and 14 times at Wal-Mart Stores Inc. .
(c) Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
|
|
|
|
|
|
Related News
Five more US bank failures bring total for 2009 to 120
New York - Bank failures in the United States have risen to 120 this year as five more regional institutions were added to the list, the US agency that guarantees the safety of bank deposits said. United Commercial Bank in San Francisco with assets o...
US stocks climb slightly despite double-digit jobless rate
New York - US stocks posted mild gains Friday to end the week as investors shrugged off government figures that put the unemployment rate above 10 per cent. The Labour Department said the jobless rate hit 10.2 per cent in the month of October, the hi...
US joblessness hits 10.2 per cent, highest in 26 years - Summary
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years as another 190,000 people lost their jobs, the Labour Department reported Friday. The figure comes after a 9.8-per-cent jobless rate in September and wa...
US joblessness jumps to 10.2 per cent, highest since 1983 - Update
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years, as another 190,000 people lost their jobs during the month, the US reported Friday. The figure reported by US Labour Department came after the 9.8 per ...
US jobless rate jumps to 10.2 per cent
Washington - The US unemployment rate surged to 10.2 per cent in October as another 190,000 people lost their jobs, according to US Labour Department figures released Friday. The jobless rate stood at 9.8 per cent in September. Unemployment had been ...
Bulls stop James, edge Cavs - Summary
Los Angeles - The King couldn't deliver in the clutch. Luol Deng and Joakim Noah combined to deny LeBron James a potential game-winning drive in the final seconds as and the visiting Chicago Bulls snapped the Cleveland Cavaliers' three-game winning...
Mortgage lender Fannie Mae posts nearly 19-billion-dollar loss
Washington - US mortgage lender Fannie Mae said Thursday that it would seek 15 billion dollars in federal aid, after posting its ninth consecutive quarterly loss. Fannie Mae reported a net loss of 18.9 billion dollars in the third quarter of 2009, co...
|
|
|
|
|
|
|
|
