This is from Briefing.com:
14:50 ET******
AMAZON.COM (AMZN) 137 +12 1/2. In response to questions about what Amazon's preliminary release of Q4 results really means, Briefing.com takes a closer look at the issue. According to the online book/music/video/electronics... retailer, 4th qtr sales will rise more than 350% from the year-ago period to $250 million. Based on analysts' estimates of Amazon's top-line results for the period, that figure is about 40% above consensus expectations. As for the issue of operating performance, Amazon does not expect the surge in sales to lead to a correspondingly lower net loss for the quarter. What the company is essentially saying is that they sold more product, but paid the price in gross margins. The company also experienced an increase in expenses associated with its attempt to ship as much product as possible by Christmas day. Unfortunately, it is extremely difficult to determine what effect the aggressive product pricing or higher fulfillment costs will have on the bottom-line this quarter. But there appears to be little doubt that when Amazon releases earnings on January 26, it will report a decline in gross margins from the Q3 level of 22.7%. Analysts are currently projecting a Q4 loss of about $0.54 a share, more than double the company's year-ago loss.In many eyes, yesterday's announcement by Amazon is being perceived as an "earnings warning," which is why the stock initially sold-off on the news. But even if Amazon misses its quarter, it is very unlikely that you will see any negative comments made by analysts. Instead, they will quietly adjust their estimates to reflect expectations of a greater loss and continue to only speak of the positives. Why would we make such an assumption? Because we've seen it before -- each time that Amazon has reported disappointing results or given indications that it will slide deeper into the red. |
