Company WatchANALYSIS OF BREAKING NEWS
Amazon.com:
Good, But Not Good Enough
January 30, 2008 - Amazon.com (AMZN-NASDAQ) reported earnings of 48 cents a share, right in line with analysts' expectations. Last year in the fourth quarter, they came in at 23 cents a share. Revenues were better than predicted, up 42%, hitting $5.67 billion, well ahead of $5.37 billion analysts expected. Initially the stock moved up over $1 in after hours trading, then settled back and went a little lower, as of this writing.
What's heartening to investors is that revenues are growing faster than anticipated and earnings more than doubled. With all the subprime mortgage news (UBS just announced it's writing off another $19 billion, well ahead of the $15 billion it stated last month, and they own more), it's refreshing to see a company that can still grow and has nothing to do with real estate. Not that it isn't affected by the economy. If real estate continues to erode and a recession of some magnitude occurs, Amazon.com will see diminished sales. But for the moment, the business model is working.
For the first quarter of 2008, Amazon is giving guidance of $3.95 billion to $4.15 billion in revenues, ahead of $3.92 billion the analysts predict. For the year, Amazon is forecasting $18.75 billion to $19.75 billion, again better than the $18.2 billion from analysts. Maybe the analysts believe there's a recession coming a little more than management at Amazon. Time will see which is correct.
The stock is down for the first month of the year, more than 23%. Even with better numbers, it isn't able to break the fear gripping investors. Too, the valuation remains high with the stock carrying a P/E (price to earnings ratio) of 85. That's priced to perfection and a little beyond. It's no wonder the price is coming off a little bit. Still, a stock that can double earnings on a year over year comparison is one that's hard to find, and investors have been willing to pay for the performance. Going forward, it might have to do even better to keep their allegiance.
- Company Web site: www.amazon.com
- Ted Allrich
|
Weekly Newsletter
printer-friendly format