Amazon’s fourth-quarter net income off 45%, misses estimates; stock jumps 9.2% in after-hours trading

“Amazon’s fourth-quarter net income fell 45 percent, as sharply higher revenue failed to keep pace with increased spending on order fulfillment and digital content, a trend that’s become the norm for the world’s largest online retailer,” Barbara Ortutay reports for The Associated Press. “The company’s financial results missed Wall Street’s expectations — but investors sent the world’s top online retailer’s stock up more than 9 percent in after-hours trading. ‘It boggles the mind,’ said BGC Financial analyst Colin Gillis, who attributed the stock price jump to slightly stronger-than-expected operating income. ‘A lot of people scratch their head at the valuation given to Amazon and the support the stock has.'”

Ortutay reports, “Amazon’s profit margins have been thin because of heavy investments —and the deep discounts the company offers consumers. Even so, investors continue to be more than forgiving. Its stock price gained 45 percent in 2012. It has risen another 4 percent so far this year. Inc. said Tuesday that it earned $97 million, or 21 cents per share, in the October-December period. That’s down from $177 million, or 38 cents per share, in the same period a year earlier. Revenue for the crucial holiday quarter grew 22 percent to $21.27 billion from $17.43 billion. Analysts had expected earnings of 28 cents per share on revenue of $22.26 billion, according to a poll by FactSet.”

“Few large corporations are able to grow revenue at such a pace year after year. Apple Inc., the world’s most valuable public company, is a notable example. The iPad maker increased revenue by 29 percent in 2012, to $165 billion. Still, investors punished Apple’s stock after it reported earnings last week, due to signs that the company’s profit margin is shrinking and its iPhone faces stiffer competition in overseas markets,” Ortutay reports. “Seattle-based Amazon’s shares rose $24, or 9.2 percent, to $284.35 in after-hours trading.”

Read more in the full article here.

MacDailyNews Take: It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way… – Charles Dickens

[Thanks to MacDailyNews Readers “Tom” and “Jax44” for the heads up.]

Related articles:
Apple’s all-time record earnings drag down NASDAQ futures – January 24, 2013
Apple’s all-time record quarterly earnings disappoint – January 23, 2013
After posting new all-time record revenue, Apple shares collapse in after-hours trading – January 23, 2013
Apple reports record results: $54.5 billion revenue, $13.1 billion profit, $13.81 EPS – January 23, 2013


      1. WOW, just wow. This totally shows what total idiots are buying stock these days.

        Apple makes more money than countries,,,, each quarter. The stock drops 100$…
        Amazon has a p/e of 3000 and loses money. People bid it even higher (700$+ is a lot to pay for a company that is ready to burst. )

        Now Amazon is so big that it cannot just die. But the stock could drop by say 500$ in less than a month…. its called “a run on the bank”. and if the lemmings ever start to run, I would say its really bad for Amazon.

        Just a thought.

        1. Yeap I am that idiot you are talking about: owned and sold Apple shares years ago and made good money on it, and I now own shares and have handsome profits if sell them today. BTW I am (oooops was) a loyal Apple fan from early 2000s when Apple wasn’t in fashion until recently (by the time iphone 5 was debuted to be precise. Any remaining hope i had until that point quickly evaporated)

  1. “Amazon’s fourth-quarter net income fell 45 percent, as sharply higher revenue failed to keep pace with increased spending…a trend that’s become the norm for the world’s largest online retailer…The company’s financial results missed Wall Street’s expectations — but investors sent the world’s top online retailer’s <b?stock up more than 9 percent in after-hours trading…

    There is something dreadfully wrong with this picture.

    Falling revenue is a trend, Amazon missed expectations, up more than 9%.

    Absolutely incredible and yet, somehow, absolutely predictable given all the love ANALysts have for AMZN and all the hate they have for AAPL.

    1. AMZN reports bad results yesterday. So, Doug Kass shows up on CNBC to talk about AAPL results from a week ago. Are the people on the payroll trying to distract the attention of the media away from AMZN for a few days?

  2. Ultimate evidence that Wall Street’s actions can always be explained by logical reasoning. The formula is the following: if you miss earnings estimates (even badly), make sure your CEO is a visionary spin doctor that can convince the market that “we expect margins to improve sometime in the future. In the meantime we will not disclose how many units we have sold of our super-successful tables, or if we will make any money from them. But they sure drive media’s attention, so we will continue to promote them (at a loss), for as long as they will boost our share price. Thank’s for your attention.”

    If only Mr Cook had a nano-fraction of the stock-market magic of Jeff Bezos, God knows where AAPL’s stock price would be?

    1. Gollum (nice !)

      The key here is that Apple is still putting money in the bank each quarter, and giving dividends, and selling way more items / profit -not market share than anyone in the world.

      Apple still has 70+% of the mp3 market… WOW.
      Apple has 70+% of the tablet – iPad market. WOW
      Apple has 70+% of the smart phone market ( Actually yes, pick even a series of smart phone from any one vendor and you will see that the iPhone series beats anyone, even the Galaxy series in sales. )

      Way long on Apple…. Just a thought.

  3. MDN have a sense of discombobulation, therefore the opening line from 1984 is appropriate and Dickensian.

    “It was a bright cold day in April, and the clocks were striking thirteen … ”
    ~ George Orwell

  4. Reuters headline says, “Amazon shares sets record after STRONG QUARTERLY PROFIT”.

    PROFIT actually fell to $97 million from $177m.

    HUH? Is it just me or has the world stopped spinning….or should I say started spinning faster. That is one hell of a spin.

  5. I remember Steve Jobs admonishing people for being of the mindset that in order for Apple to win Microsoft must lose which MDN and Fanbois have transferred to Amazon, I presume.

    Apple and Amazon are not in the same business, nor are Google and Apple. If it has to be explained to you you probably should not be investing in any of these stocks.

    Amazon is building a huge, wide and deep company that is scaring the shit out of Wal-Mart and others right now. If you are lucky enough to live in one of the testbed areas you can get your groceries- organics and all- delivered to your door on the same day. That is but one of many things they are working on and standing up.

    It’s just like the Kindle. The Kindle is not about selling Kindles as much as it is about selling eBooks.

    Apple is a company that designs and markets cell phones, tablets and Macintosh PCs. In support of that hardware it makes some software and offers some web services and eCommerce.

    Amazon is building for a different future and it is spending tons to get there. Apple is buying back stock, paying dividends, enriching lawyers with lawsuits to the horizon and wandering in the wilderness like the children of Israel.

    Get a clue.

    1. So, to summarise:

      Over past ten years, Apple re-invented portable music player business (iPod), music industry (iTunes Store), smartphone (iPhone) and tablet (iPad). The conclusion of Wall Street is that they are done re-inventing, they won’t be entering other market spaces where they weren’t players before, and the only growth ahead is incremental (from upgrades to existing product lines and expanding sales in the rest of the world). So, no record quarter or hordes of cash in the bank will convince investors that the growth rate of past ten years will continue.

      On the other hand, we have Amazon that apparently shows intent to enter new markets, and these are mainstream ones (not a niche, such as gaming consoles, or golfing equipment). So, Wall Street believes that Amazon has the talent and vision to execute flawlessly and conquer these markets.

      OK, so I see what you’re getting at. A minor quibble with the concept, though. Apple has so far showed consistent (and massive) profit growth, solid margins, as well as quite regular pace of innovation (every 4 – 5 years, a new, product that re-defines its category). From the iMac (’97), to iPod (’02), iPhone (’07), iPad (’10), Apple kept delivering. Now that Jobs is gone, the Street believes there will be no such next category-redefining product.

      Amazon, on the other hand, generates razor-thin profits, shows declining growth, promises many things with very little track record to back it up.

      Wall Street people can sometimes be a very, very optimistic bunch… Then again, those same types bought into the dot-com hype (as well as the sub-prime mortgage-based derivatives)…

    2. You are not wrong. Toward the end of the most awesome “Pirates of Silicon Valley”, while Steve and company are off stage with Bill Gates, celebrating their victory over IBM, it becomes clear that Apple had been focussing on the wrong threat. While Bill G. was “helping” Apple revolutionize the personal computer, Microsoft snuck in and stole their pudding.
      Amazon is fighting a different battle that affects the Apple business model in a different way. For Apple to grow, it believes it needs to own the channels and streams that people want to use on their products. This is not what Apple is good at. Apple pretends all it wants is to make great hardware (Amazon sells these products) but it desires more. Apple sells Amazon products on it’s devices/ecosystem as well, but does not compete well with what amazon does best–fulfillment. Amazon sells iPads and Kindles but does not compete well with what Apple does best—great hardware.

      Apple and Amazon are not enemies but the market sees and understands the race Amazon is running and winning. The market sees that Apple is winning the race they are running but they can not understand or see the finish line.

      Apple needs to free itself from its own misguided desires. They have learned the wrong lesson from the iPod/iTunes/iTunes Store/iPhone/app Store evolution/dominance. The iPod solved a problem nobody knew they had. Apple sold many iPods. This created a new problem that Apple solved: how do I listen to what I want on this thing? Apple solved that problem and sold even more iPods. Apple did not seek to profit from music sales, they sold music at a loss to sell hardware for a profit.

      Sound familiar?

      Amazon executes in the inverse and it seems more growth oriented and profitable to the market than the hardware business (see Microsoft etc.) because it is.
      Apple sucks at this. They just do. There is a hard cap to hardware. Apple is best at hardware. Apple will win the hardware wars but they can not win the rest. They need to stop trying before it is too late.

  6. I smell an Enron. The average joe investor is being hoodwinked into buying Amazon by stock advisors being promised untold riches.
    The stock will crash and take many poor sods retirement money along with it. In the meantime the brokers will be laughing all the way to the bank.

    1. NOW you smell and Enron? The fracking Spirit Of The Age stinks of Enron!

      And what do I call this Age of ours? The Age of Marketing. AKA the age of propaganda and flimflam. AKA the age of wolves and sheeple. Thank you to our Corporate Oligarchy for leading us here, you parasites. 😛

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.