07/23/2009：AMZN ER

07/23/2009：AMZN ER

Amazon's lower margins spook Street, shares fall

SAN FRANCISCO (Reuters) - Amazon.com Inc (NasdaqGS:AMZN - News) on Thursday posted a lower quarterly net profit and thin operating margins that took some of the shine off the world's largest online retailer, sending its shares down 6 percent in after-hours trade.

Amazon, fresh from announcing on Wednesday it would acquire online shoe store Zappos.com for some $928 million, also reported second-quarter revenue that fell just short of Wall Street estimates.

Investors have come to depend on Amazon outpacing a soft e-commerce market, as it has taken market share and continued to launch new categories of goods to sell. But the modest results and strained margins took some of the luster off a retailer that many investors view as overvalued.

"It wasn't the blow-out quarter necessarily you've see from them in recent quarters," said McAdams Wright Ragen analyst Dan Geiman, noting that stock had had "such a good run in recent weeks."

Positive sentiment on the stock has pushed shares up a whopping 80-plus percent since the start of 2009 -- well in advance of the Nasdaq and outpacing main rival eBay Inc (NasdaqGS:EBAY - News). That gain has led many investors to deem Amazon, despite recent successes in a difficult consumer spending environment, as overly pricey.

Operating margins were 3.4 percent in the quarter, well below the 5 percent seen in the first quarter. At least two analysts had been expecting margins of 4.1 percent or 4.2 percent.

Net profit in the second quarter fell 10 percent to $142 million, or 32 cents per share, from $158 million, or 37 cents per share, a year earlier. That was a penny above the 31 cents expected, on average, by analysts, according to Reuters Estimates.

Operating profit was $159 million, a 27 percent drop, caused by changes in foreign exchange rates and a settlement with Toysrus.com.

Revenue rose 14 percent to $4.65 billion -- shy of the $4.69 billion analyst estimate. Excluding currency fluctuations, revenue rose 20 percent.

Amazon had forecast second-quarter revenue of $4.3 billion to $4.75 billion and an operating profit of $110 million to $190 million.

Looking ahead, Amazon forecast third-quarter revenue of $4.75 billion to $5.25 billion -- compared with the $4.92 billion expected by analysts -- with operating profit between $120 million and $210 million.

Shares fell 6 percent to $88.26 after closing on the Nasdaq at $93.87, up 5.7 percent.

Amazon's Zappos buy seen clearing antitrust review

WASHINGTON, July 23 (Reuters) - Amazon.com's (AMZN.O) purchase of shoe seller Zappos.com, known for attentive customer service, will likely race through an antitrust review unscuffed, antitrust experts said on Thursday.

While Amazon.com is buying a rival to its disappointing Endless.com site, the nearly $1 billion deal will likely be approved since neither Amazon nor Zappos is a major shoe distributor, despite their online fame, experts said.

Further, the business of selling shoes is easy to enter.

"What the government is concerned about is whether the merger will increase prices," said Kendall Millard, an antitrust expert with Barnes and Thornburg LLP. "The online market is such that it's difficult to see that there would be significant barriers to entry."

A former senior attorney with the Federal Trade Commission predicted the agency was unlikely to challenge the deal based on the merging firms' ability to raise prices, since these firms face many other competitors.

"If you just look at online shoes, there's a lot of players out there," said James Fishkin, now at law firm Dechert LLP, mentioning Shoes.com, Onlineshoes.com, DSW.com, Nordstrom.com, Payless.com, Piperlime.com and others.

"These aren't small guys. These are real players out there who are selling shoes online," said Fishkin.

The FTC and Justice Department divide the work of antitrust enforcement.

Nor was the government likely to separate online shoe companies into a separate category from brick-and-mortar stores in assessing the deal, experts said.

"At some point the growth of online sales is going to require judicial interpretation as to whether (online sales) is a relevant product market -- separate from brick & mortar retail, but we're not there yet," said Chul Pak, an antitrust lawyer with Wilson Sonsini Goodrich and Rosati. "And shoes isn't a particularly good test case."

Pak also said he thought it was "highly unlikely" that antitrust regulators would challenge the deal.

"A market of 'online shoe sales' seems too much in its infancy to raise antitrust problems in the near future," he said.

Zappos, which sold about $1 billion in merchandise last year, is known for its customer service, free shipping and free returns. The company said Amazon will allow it to continue running its business as it always has.

Amazon, which began as an online bookseller, has greatly expanded its range of offerings while also allowing third-party sellers to showcase their own items on its site.

The Zappos website says the company, founded in 1999, has more than 1,300 employees and stocks more than 3 million shoes, handbags, clothing items and accessories from more than 1,136 brands.

Amazon said it will acquire all of the outstanding shares of Zappos and assume its outstanding options and warrants in exchange for approximately 10 million shares of Amazon common stock. It will provide Zappos employees with $40 million of cash and restricted stock units.

Based on Amazon's closing price of $93.87 on Thursday, the deal is valued at about $978.7 million.

Amazon's lower margins spook Street, shares fall

SAN FRANCISCO (Reuters) - Amazon.com Inc (NasdaqGS:AMZN - News) on Thursday posted a lower quarterly net profit and thin operating margins that took some of the shine off the world's largest online retailer, sending its shares down 6 percent in after-hours trade.

Amazon, fresh from announcing on Wednesday it would acquire online shoe store Zappos.com for some $928 million, also reported second-quarter revenue that fell just short of Wall Street estimates.

Investors have come to depend on Amazon outpacing a soft e-commerce market, as it has taken market share and continued to launch new categories of goods to sell. But the modest results and strained margins took some of the luster off a retailer that many investors view as overvalued.

"It wasn't the blow-out quarter necessarily you've see from them in recent quarters," said McAdams Wright Ragen analyst Dan Geiman, noting that stock had had "such a good run in recent weeks."

Positive sentiment on the stock has pushed shares up a whopping 80-plus percent since the start of 2009 -- well in advance of the Nasdaq and outpacing main rival eBay Inc (NasdaqGS:EBAY - News). That gain has led many investors to deem Amazon, despite recent successes in a difficult consumer spending environment, as overly pricey.

Operating margins were 3.4 percent in the quarter, well below the 5 percent seen in the first quarter. At least two analysts had been expecting margins of 4.1 percent or 4.2 percent.

Net profit in the second quarter fell 10 percent to $142 million, or 32 cents per share, from $158 million, or 37 cents per share, a year earlier. That was a penny above the 31 cents expected, on average, by analysts, according to Reuters Estimates.

Operating profit was $159 million, a 27 percent drop, caused by changes in foreign exchange rates and a settlement with Toysrus.com.

Revenue rose 14 percent to $4.65 billion -- shy of the $4.69 billion analyst estimate. Excluding currency fluctuations, revenue rose 20 percent.

Amazon had forecast second-quarter revenue of $4.3 billion to $4.75 billion and an operating profit of $110 million to $190 million.

Looking ahead, Amazon forecast third-quarter revenue of $4.75 billion to $5.25 billion -- compared with the $4.92 billion expected by analysts -- with operating profit between $120 million and $210 million.

Shares fell 6 percent to $88.26 after closing on the Nasdaq at $93.87, up 5.7 percent.


Amazon Sales Surge, but Profit Dips

Amazon(AMZN Quote), which released its second-quarter results after market close, is enjoying strong sales, but saw its profit slide as the economy slowly gets back on its feet.

The Web retailer's revenue came in at $4.65 billion, a 14% increase on the same period last year, but just below Wall Street's estimate. Analysts had expected second-quarter sales of $4.69 billion.

Investors who'd been eagerly awaiting Amazon's results to gauge the health of high-profile tech stocks will be relieved to see the retailer's sales figures.

Despite its revenue hike, however, Amazon's profit took a hit. The Seattle, Wash.-based firm earned 32 cents a share on net income of $142 million, down from 37 cents a share and $157 million in the year-ago quarter. Analysts surveyed by Thomson Financial had expected earnings of 32 cents a share.

Even taking the profit slump into account, the results show Amazon's ability to largely breezed through the tough economic conditions of recent quarters.

"We're staying heads down focused on providing customers low prices, vast selection, and fast delivery," said Jeff Bezos, the Amazon CEO, in a statement. The firm's customers saved more than $900 million in free shipping during the quarter, he added.

The Internet retail giant's results follow good numbers from eBay(EBAY Quote) and Yahoo!(YHOO Quote), which both posted decent quarterly figures earlier this week.

Amazon also issued bullish guidance, predicting third-quarter sales between $4.75 billion and $5.25 billion, at the high end of Wall Street's $4.92 billion estimate.

The company expects operating income between $120 million and $210 million, which includes $95 million for stock-based compensation and amortization.

Amazon shares slipped $7.27, or 7.74%, to $86.60 in extended trading.



Amazon Net Falls on Legal Settlement

Amazon.com Inc.'s second-quarter earnings fell 10% as unusual items masked strong revenue growth.

The Internet retail giant's shares fell 5.8% to $88.23 in after-hours trading, even though earnings topped Wall Street expectations and third-quarter revenue guidance was roughly in line with analysts' views.

The stock, having nearly tripled since late November, hit a 52-week high earlier Thursday, closing at $93.87, up $5.08, in 4 p.m. trading on the Nasdaq Stock Market.

Amazon has been grabbing customers from competitors online and off, shrugging off worries about the economic downturn and margin pressures from low prices. The company has also scored with its Kindle, a $299 electronic book reader.

Signaling its confidence, Amazon this week made its biggest acquisition deal ever, announcing Wednesday it will buy shoe retailer Zappos.com Inc. for $847 million in cash and stock.

The company reported earnings of $142 million, or 32 cents a share, compared with $158 million, or 37 cents a share, a year earlier. Analysts expected 31 cents, according to a Thomson Reuters poll.

The latest quarter included a $51 million charge for a settlement with Toyrsrus.com LLC, while the year-ago period included a $53 million noncash gain from the sale of its European DVD rental business. The stronger dollar also shaved $30 million from pretax income.

Revenue climbed 14% to $4.65 billion. Excluding currency fluctuations, the figure would have risen 20%. Amazon said. In April, Amazon forecast expected revenue of $4.3 billion to $4.75 billion for the quarter.

Electronics and other general merchandise posted the biggest gain, rising 35% overall, while media -- which accounts for just over half of sales -- eked out a 1% rise. The segments would have grown 41% and 7%, respectively, without the effect of the stronger dollar, it said.

Gross margins widened to 24.4% from 23.8%.

Amazon forecast third-quarter sales of between $4.75 billion to $5.25 billion, up 11% to 23% from a year ago. Wall Street expects revenue of $4.92 billion. The company also sees operating income down 22% to up 36%, resulting in a range of $120 million to $210 million. It posted operating income of $154 million in the third quarter last year on sales of $4.26 billion.



UPDATE 1-Amazon posts lower profit, shares drop after hours

* Q2 EPS 32 cents

* Q2 revenue up 14 percent, shy of Street

* Sees Q3 revenue of $4.75 billion to $5.25 billion

* Shares fall 5.6 pct after closing up nearly 6 pct

SAN FRANCISCO, July 23 (Reuters) - Amazon.com Inc (AMZN.O) posted a quarterly net profit on Thursday that fell by 10 percent as foreign currency fluctuations and a legal settlement hit earnings at the world's largest online retailer, sending shares down more than 5 percent.

Amazon, fresh from announcing on Wednesday it would acquire online shoe store Zappos.com for some $928 million, said net profit in the second quarter fell 10 percent to $142 million, or 32 cents per share, from $158 million, or 37 cents per share, a year earlier.

Operating profit was $159 million, a 27 percent drop, caused by changes in foreign exchange rates and a settlement with Toysrus.com.

Revenue rose 14 percent to $4.65 billion -- shy of the $4.69 billion analyst estimate. Excluding currency fluctuations, revenue rose 20 percent.

Amazon had forecast second-quarter revenue of $4.3 billion to $4.75 billion and an operating profit of $110 million to $190 million.

Looking ahead, Amazon forecast third-quarter revenue of $4.75 billion to $5.25 billion -- compared with the $4.92 billion expected by analysts -- with operating profit between $120 million and $210 million.

Shares fell 5.6 percent to $88.62 after closing on the Nasdaq at $93.87, up 5.7 percent.


Amazon 2Q profit falls with Toys R Us settlement

Amazon 2nd-qtr profit declines due to Toys R Us dispute settlement charge, beats analyst views

SAN FRANCISCO (AP) -- Amazon.com Inc. said Thursday that its second-quarter earnings fell while sales rose, due to a $51 million payment to settle a long-standing dispute with former partner Toys R Us. The profit still beat Wall Street estimates, though.

Shares of Seattle-based Amazon fell more than 9 percent in extended trading after the results were released.

Amazon.com earned $142 million, or 32 cents per share, in the April-June quarter, 10 percent lower than profit of $158 million, or 37 cents per share, a year ago. Analysts polled by Thomson Reuters expected a penny less per share.

Sales climbed nearly 15 percent to $4.65 billion, slightly below analyst estimates of $4.69 billion. Amazon's sales were helped last year by a $53 million non-cash gain from the sale of European DVD rental assets.

The company's North American sales rose 13 percent, while international sales increased 16 percent.

Sales of items such as books, CDs and DVDs inched up 1 percent to $2.44 billion in the second quarter, while electronics and other general merchandise sales soared 35 percent to $2.07 billion.

Amazon forecast third-quarter sales of $4.75 billion to $5.25 billion, in line with analyst estimates for $4.92 billion.

Amazon lost $8.75, or 9.3 percent, in after-hours trading. The company -- which said Wednesday that it will buy privately held online shoe store Zappos.com Inc. in a deal worth about $850 million -- finished regular trading at $93.87, after hitting a new 52-week high of $94.40.