The immediate reaction to
) fourth-quarter report has been quite positive as it appears
that margins improved, despite the fact that the online retailing
giant again missed expectations on both the top and bottom
Nonetheless, shares are jumping approximately 10% in the after
AMZN earned 21 cents in the fourth quarter, which fell short
of the Zacks Consensus Estimate at 29 cents and was below last
year's 38 cents. This marks the third straight quarter with a
negative earnings surprise. Net sales increased 22% from last
year to $21.27 billion, but again that was below expectations of
However, operating income was up 56% to $405 million.
Looking toward the first quarter of 2013, AMZN forecasted net
sales between $15 billion and $16.6 billion, which would grow 14%
to 26%. The Zacks Consensus Estimate is at $16.9 billion.
But taking a larger perspective, Amazon has been making a lot
of investments for the future, which have been weighing on its
margins. This report seems to indicate that the long-promised
margin turnaround may finally have begun.
Chief Jeff Bezos stated: "We're now seeing the transition
we've been expecting." He was referring to positive customer
responses for categories like eBooks and Kindle. Perhaps
investors agree that AMZN has turned a corner and will,
therefore, be more forgiving of this earnings miss.
If analysts share the immediate and positive response to this
quarterly report, then perhaps Amazon could improve its Zacks
Rank #3 (Hold). Earnings estimates for 2013 have been all over
the place in the past 60 days. Out of 29 total estimates, six
have been revised lower in that time while 4 were raised.
We'll have more on this report coming soon...
AMAZON.COM INC (AMZN): Free Stock Analysis
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