Wednesday, October 22, 2008

Amazon Announces 3Q Earnings!

Amazon announced 3rd quarter numbers today after the close of the market and quickly saw it's shares lose 12% in after hours trading.

You know that I've been very bullish on Amazon as a business and it appears they are not immune to the economic slowdown, though they fared better than many of their peers.

Here are the numbers:
  • Net sales increased 31% to $4.26 billion in the third quarter, compared with $3.26 billion in third quarter 2007 - Wall Street was looking for $4.27 billion so they missed the estimate.
  • Net income increased 48% to $118 million in the third quarter, or EPS of $0.27 per diluted share, compared with net income of $80 million, or $0.19 per diluted share, in third quarter 2007. - The Street was looking for EPS $0.25 So they beat on the bottom line.
The problem comes with their 4th quarter guidance. Much like with eBay, Amazon is expecting a much slower 4th quarter, but unlike eBay Amazon will still have a Christmas. Amazon is expecting $6 billion on the low end for the 4th quarter as opposed to $4.26 billion for the 3rd quarter. eBay actually is expecting less revenue in the 4th quarter then they earned in the 3rd quarter.

4t Quarter Guidance:
  • Net sales are expected to be between $6.0 billion and $7.0 billion, or to grow between 6% and 23% compared with fourth quarter 2007. The Street is expecting $7.083 billion
Amazon has revised their 4th Quarter guidance down by about $500 million dollars and that is certainly disturbing. I was expecting a better 4th quarter forecast then this, so it is clear Amazon is not as immune to this consumer spending environment as I thought they would be.

More after I hear the Conference call.

Just my 15%

10 comments:

Anonymous said...

Randy: you have been pushing Amazon over Ebay for a long time. This shows that Amazon will slow alot when the economy slows down.Both companies are having troubles !!!!!

Randy Smythe said...

Anonymous,

Yep, I felt Amazon had a better shot than Amazon ans I still do, but that doesn't mean that Amazon will not be affected.

I didn't see this.

Anonymous said...

eBay makes 500m in Q3, Amazon makes 120m in Q3. eBay's PE is 10, Amazon's is 30. eBay's market value is 19B, Amazon's is 21B.

Something does not make sense....

Tony P. said...

I figured that Amazon would have some downtrend. Hey, the economy truly SUCKS.

Even if they are apples to oranges, let's keep just the Fruit together, shall we?

Ebay's Marketplace numbers severely SUCKED; Amazon's were just OFF.

Put another way: strip out Paypal and Skype numbers, whatcha got left? Dregs.

At least the Grinch is gonna stay away from Amazon. :)

Anonymous said...

Amazon really sucks. They are becomming more like eBay every day with random merchants popping up everywhere. I'm glad they f***** up too.

Boycott Amazon!!

Moonlight said...

anonymous at 5:15 pm

No need for such anger. Just filter your search results on Amazon. It's only one extra click.

Randy Smythe said...

Anonymous 3:41,

Amazon is just given a premium value for their growth. The still grew profit by 48% Y/Y

They are still growing 3x ecommerce while eBay is relying on PayPal and Skype for its growth.

Tony, even though they guided down they are still my bet for sales this quarter.

ms.pat said...

As a buyer on Amazon I wouldn't say they suck. If I buy anything online this year its most likely to be bought from Amazon. In fact I just ordered an item a couple of days ago and here it is on my desk faster than you can snap your fingers. I'm happy with Amazon and have been for years now.

Randy Smythe said...

Pat,

I just bought 3 items from Amazon and they arrived without fail on or before the date Amazon said. I never even question an order coming from Amazon.

ms.pat said...

Randy - me either - in all the years I bought from Amazon I only had a problem with one of their sellers (over a book). Amazon stepped right in and took care of the whole situation. Things like that make a buyer feel secure. That's something Ebay won't do...it costs too much for them to do that which is why they're doomed on this path. Unless they want to put that kind of effort into it - what they're doing just isn't going to work.