WTF: Amazon Barely Ekes Out Profit on $21B in Sales, Misses Estimates, Stock Jumps 10%
Those who regularly have the distinct pleasure of listening to Amazon’s quarterly conference call for investors know that the company rarely says anything of substance in these calls. Usually, executives deflect questions, reading canned lines and sticking to the appropriate PR speak. But this quarter’s investor call may have been the shortest in history.
That’s probably because Amazon’s press release only tells one side of the story, and executives probably aren’t too eager to respond to any of those pesky naysayers. Here’s why: In spite of its $21 billion in sales, Amazon underperformed compared to analysts’ expectations. Of course expectations were high thanks to the usual holiday shopping bump for retail and e-commerce, but Amazon was expected to hit $0.27 EPS and $22 billion in revenues, and Amazon instead underperformed, coming in at $0.21 and $21 billion, respectively.
That may not sound like a lot, and Amazon executives clearly think there isn’t much to be worried about, especially considering the company has $8 billion in cash. That’s nothing to scoff at, clearly, but there’s also the fact that the company’s net income decreased by 45 percent in the fourth quarter and growth is slowing. Amazon saw just $97 million in net profits in Q4. Yes, $97 million. That would be a big win for a company with $1 billion in revenue, but I’m probably not going out on a limb to say that it’s a red flag when you’re doing $21 billion.
If you look at the profit/loss graph in Leena’s post from earlier today [also included at the bottom of this post], one sees that Amazon hasn’t tallied more than $177 million in profits … well, for quite some time.
What’s more, as Zero Hedge points out, it’s almost comical that Amazon’s stock jumped after-hours. The irrationality of the markets in top form. The stock shot up this afternoon even after Amazon lowered its top-line guidance, projecting sales of between $15 to $16 billion, along with operating income.
