Amazon shares drop as revenues disappoint

“Amazon.com’s plans for world domination hit a slight bump on Tuesday,” David Streitfeld reports for The New York Times. “For years, the retailer has been telling Wall Street to ignore how little money it was making and focus instead on the fact that it was bringing in more and more customers and keeping them so happy they never went anywhere else for anything.”

“In Amazon’s fourth-quarter results, however, investors finally glimpsed off in the distance that growth beginning to flatten. Its revenue rose to $17.43 billion, up 35 percent. Most retailers would die happy with such a jump. But for the e-commerce leader, sales were nearly a billion dollars short of what analysts had been expecting,” Streitfeld reports. “Even as investors are panting for Facebook’s public stock offering, established Internet stars are disappointing. Amazon’s poor showing came on the heels of a similar miss from Google.”

Streitfeld reports, “In its earnings release, Amazon also warned that it could lose money in the current quarter, offering a range between $100 million in operating income and a $200 million loss. Shares of Amazon, which rose $2.29 to $194.44 on Tuesday, immediately slumped in after-hours trading by $18. ‘With the valuation Amazon is carrying, you got to perform,’ said Colin Gillis, senior technology analyst for BGC Financial. ‘You’ve got to be like Apple — smash through the numbers people are afraid even to whisper. Instead, they’re only making slightly over a penny on every dollar in revenue. That’s pathetic in any industry.'”

Read more in the full article here.

MacDailyNews Take: But, but, “millions of Kindles!”

Kindle Fire, the most wished for and dreamt about piece of crap ever foisted on the tablet ignoranti this side of the BlackBerry PlayBook and the HP TouchPad. How many Kindle Fire returns did you have, Jeffie? Come clean for once.

15 Comments

    1. Yes, every plastic, cheapo, unresponsive, tiny screen Kindle Fire sold at a loss magically becomes profitable as disappointed customers send them back for a refund so they can get the Apple iPads they really wanted.

      Amazon logic.

    2. This is exactly what I don’t understand about Amazon’s strategy: their “razors” sell at razor-thin margins. How is te company supposed to make up the loss of the Fires when their profits on the stuff they sell are so slim? Customers will have to buy a *ton* of stuff for Amazon to just break even, let alone return a profit. (It gets worse when you figure that a high percentage of Fire buyers won’t buy anything at all, meaning that others must buy even more to make up for those freeloaders.)

      1. Which is why Amazon’s profit last Quarter was $177 million. They are like a small rodent compared to the grizzly bear known as Apple.

        Selling a loss leader device, with a loss-leader service (Amazon Prime) selling merchandise on razor thin margins.

        No, I don’t get it either.

  1. Gillis of BGC was a bit of a negative analyst on Apple as well, right before earnings on CNBC, so he’s a bit of a tool.

    I’ve always perceived Amazon as a bubble stock. They’ve hoodwinked everyone to focus on the top line, revenue, just like in the dot bomb days, and to ignore the bottom line, profits. When the top line slows, they have to show that the bottom line is growing, not going in the red. The story of warehouse expansion is getting old. When is that capacity going to pay off and be a competitive advantage? I worry that companies that learn how to spend, never stop.

  2. Let’s makes billions of dollars in sales…billions! Turns out that the profit margin is 1.1%. Wow. And the next quarter they’re going into losses with even more sales. But not to worry, they’ll make it up in volume on the Kindle Fire. Billions in returns! Billions in sales!

    Bezos is the next Ballmer!

  3. It’s a really bad bad business model to have to give something away of value on the hope for future business. As much as I am unhappy that Apple product and service prices are so high, I have to admire the way Apple built it’s interconnecting pieces. For example, the App store, iTunes, etc. must make money, period. There’s no free lunch. No free iTunes store and low priced music to sell more iPods, iPhones, iPads, etc. Apple makes each significant part of the business cover it’s cost and provide a return based on the excellence of the offering.

    Amazon on the other hand, created a crappy iPad wannabe, and is selling at or below cost. It is creating a business model that will guarantee a poor product because the returns will not be there to make excellent products and services. Pitiful indeed.

    1. Look at the bright side. Amazon’s action on the KF essentially destroyed the Android wannabe tablets market. I find it amusing that Bozos doesn’t break out the numbers. What is he hiding?

      Looks like AMZN may be the NTFLX stock of 2002. Sinking into reality.

      If Congress passes some sort of internet tax to require on line sellers to tax all sales and pass it to the states, Amazon will be so screwed. If Apple can figure it out, why can’t AMZN. Apple likely has to charge state and city sales tax on orders from NYC.

  4. Amazon’s, Microsoft’s, Google’s, Dell’s, HP’s business models are all geared towards fishing for the bottom. They are interested in market share but earned thin margins. They are bottom-feeders and bottom dwellers. While Google and Microsoft initially profited because they are the godfathers; in the end they will suffer as well. Those who aim for market share are butchering one another. Microsoft’s and Google’s models are never good for American firms because they encourage laziness and risk aversion and will guarantee that America will lose another industry to China, Japan and Korea.

    Microsoft’s and Google’s models are perfect for Asian firms such as Samsung, HTC, etc. They got free technology the easy way. Samsung, especially is a chaebol, which has deep pocket and incestuous ties with politicians. Samsung’s tentacles grow into many products and services, from ships to everyday commodities. It uses its chaebol’s power to muscle into every businesses. Governments in the European Union are getting nervous that Samsung are killing their home-grown firms with uncompetitive, predatory Mafia tactics to win market share. But the American government is still sleeping blissfully.

    1. This stock is worth for about $25 to $30. Over 100 too expensive. Another quarter result and it will be less then $50. Dont invest and if somebody has invested then it’s better to sell it as fast as possible

  5. Kindle Fire is terrible. But the share drop of 10% today was a very good chance to get several hundreds, so I did. I know from the German market how much they invest in warehouses and shipping facilities. That cuts the profit for the moment. But the comeback will happen.

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