congratulations to all on ENGA today - OT:
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CNBC-MARKET WRAP
THE WALL STREET JOURNAL REPORTER STEVE FRANK WITH AMAZON.COM (AMZN) AND AMERICA ONLINE (AOL) EARNINGS PREVIEWS
JULY 20, 1999
SUMMARY: Frank says AOL is expected to announce earnings tomorrow that double year-ago numbers. Frank says AMZN's losses are expected to quadruple.
Bill: In the Internet investor today, two of the biggest Internet companies due to report earnings tomorrow, about this time. Amazon.com and America Online. "Wall Street Journal's Steve Frank joins us with a preview of what to expect.
Steve: Thanks very much, Bill. These are arguably two of the three, four most significant and hotly awaited earnings reports in the entire Internet sector. Aside from that, while they're expected to look nothing alike. They're among the biggest, best known Internet companies in existence, regarded as two of the industry's most significant bellwethers. One is the Net's most visited site, the other its most popular retailer. But beyond that, there is likely to be little common ground when America Online and Amazon.com report earnings after the bell tomorrow. One is the most profitable company on the Web; the other is bleeding red ink at an accelerating rate.
You've got mail.
Steve: How about you've got profits? At AOL earnings were expected to nearly double from a year ago to 11 cents a share, more than 130 million dollars, though Wall Street's unofficial whisper forecast is for profits to exceed the per share estimates by as much as 2 cents. Revenues expected at 1.34 billion dollars and gross margin is expected to hold steady at about 45%, as the company balances higher advertising revenue from having customers spend more time online and resulting higher network usage costs. Indeed, AOL has told analysts to expect between 750 and 850,000 new subscribers, bringing total membership to more than 20 million, its advertising dollars, not subscription fees, that are really boosting AOL's bottom line.
The company has been diversifying a lot in the last couple years, now have a lot of properties that aren't depending on subscription revenue and those should add a lot of advertising commerce revenue, where the profit comes from in the company.
Steve: Amazon.com, the biggest retailer which added toys and consumer electronics to its stable of book, music, videos, auctions, the company's ballooning marketing costs, rising inventory, increased number of warehouses expected to cause losses to quadruple to 51 cents a share or more than 89 million dollars. But revenues are expected to soar as well to 312 million dollars. Amazon's gross margin expected to stay in the neighborhood of 22% and the company is thought to have added 2 million customers in the quarter bringing total to well over 10 million. That's a lot of customers for a company that as Internet officianados want to say, isn't yet burdened by profits. Both reports are due out shortly after 4:00 p.m. tomorrow with conference calls to follow, full coverage here on "Market Wrap."
Sue: Steve, today we saw a lot of what some were calling buying the rumor, in other words, ahead of the earnings reports, we saw some companies be bid up and sold them today after those results were out. Hard to tell exactly what to expect from Amazon and AOL given the fact that they got slammed today.
Steve: They both did get slammed today. In the past, we've seen all the internet companies bid up in advance of the earnings and then sell off after earnings whether they're good or bad or not. This is a deviation from that, some hedge fund managers speculating people have taken that track record into account and are selling in advance of the earnings, realizing this pattern has happened before.
Bill: Is this, I don't know if you know, is this a seasonally low period for the Internet stocks? Every year it seems this is about the time they start selling them any way.
Steve: That's true, summer time, you know, people say that people are not at their computers, not using computers as much and not buying as much advertising as, at this time of year, people expect momentum to pick up, experts expect momentum to pick up in the third quarter and especially into the fourth quarter.
Sue: Thanks, Steve. |
