Amazon (AMZN) / Jeff Bezos

Re: Amazon (AMZN)

Postby iam802 » Wed Feb 01, 2012 8:49 am

The tablet market is going to drag lots of companies down...

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Amazon’s Sales Miss Estimates, Profit Drops 57%

http://www.bloomberg.com/news/2012-01-3 ... -drop.html

Amazon.com Inc. (AMZN), the world’s largest Internet retailer, missed analysts’ fourth-quarter revenue estimates and reported a 57 percent decline in profit, dragged down by shipping costs and the money-losing Kindle Fire.

Net income fell to $177 million, or 38 cents a share, from $416 million, or 91 cents, a year earlier, the Seattle-based company said today in a statement. Sales rose 35 percent to $17.4 billion, compared with an estimate of $18.3 billion.

Chief Executive Officer Jeff Bezos is squeezing profit margins in search of growth, looking to add customers by pushing free shipping and offering its Kindle devices at cut-rate prices. That has conditioned investors to expect strong sales increases, making the latest results disappointing, said Colin Gillis, an analyst at BGC Partners LP in New York.

“To miss on the top line, that’s what breaks the momentum,” said Gillis, who recommends selling Amazon stock. “The bull case just breaks down.”

Amazon shares fell as much as 11 percent in extended trading after closing at $194.44 in New York. The stock had gained 15 percent in the past 12 months.

First-quarter operating income may range from a loss of $200 million to a gain of $100 million, the company said. Analysts in a Bloomberg survey were projecting a profit of $268.1 million. Sales will be $12 billion to $13.4 billion, Amazon said, compared with an estimate at the top of that range.

Third-Party Revenue

More of Amazon’s revenue is coming from third-party sellers, which hawk their wares on its site. While those transactions carry higher profit margins, they don’t bring in as much money as when Amazon sells an item directly. Unit sales by outside retailers increased 65 percent during the holiday quarter and now make up 36 percent of total units sold, Bezos said in the statement.

“Whenever there’s a mix-shift toward third party, it helps margins, but it reduces revenue,” said Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco. He has an “outperform” rating on Amazon’s stock.

The shift helped earnings top estimates last quarter, even with the sales shortfall. Analysts projected 16 cents a share. Still, the operating margin tightened to 1.5 percent last quarter, from 3.7 percent a year ago.

“Trying to predict during a seasonal Q4 is challenging,” Tom Szkutak, Amazon’s chief financial officer, said on a conference call. “That third-party increase is great for customers, great for sellers and helped our bottom line.”

Amazon Prime

Amazon’s Prime program, which offers unlimited two-day shipping for $79 a year, boosted expenses over the holiday shopping season, said Jason Helfstein, an analyst at New York- based Oppenheimer & Co.

“With shipping, if you look at that net loss number as a percentage of revenue, it keeps going up,” he said. “They’re trying their best to offset that in other ways.”

The Prime program is designed to lock in customers and encourage them to do more shopping in the long run.

While that means money spent on shipping increases as a percentage of revenue -- to 8.4 percent of sales in the third quarter from 7.6 percent three years ago -- those subscribers may spend at least three times more than regular customers as they become habitual shoppers on Amazon’s site, said David Spitz, president of ChannelAdvisor, a Web-strategy consulting company in Morrisville, North Carolina.

“That ratio grows with the tenure of a subscriber, meaning that after a couple of years, a Prime subscriber may be spending six times or more,” Spitz said.

Kindle Fire

The approach is the same for the Kindle Fire tablet. At $199, the device is less than half the price of Apple Inc. (AAPL)’s cheapest iPad. The expectation is that consumers will spend the money they save on Amazon’s e-books and video content, Jordan Rohan, an analyst at Stifel Nicolaus & Co., said in a note yesterday. That eventually will more than make up for revenue lost selling the device, he said.

For now, Amazon’s media revenue isn’t growing as quickly as anticipated. U.S. media revenue climbed 8.1 percent last quarter, about half the 15 percent that Sebastian was predicting. A decline in video-game sales hurt the unit’s results, Szkutak said.

Investors had speculated that the company would get a bigger boost from a 15 percent gain in industrywide holiday e- commerce spending, which ComScore Inc. (SCOR) pegged at a record $37.2 billion.

“When you have revenue growth start to stall, then the valuation question marks start to rise,” Gillis said.

Amazon trades at 141.9 times earnings in the past 12 months, according to data compiled by Bloomberg. By comparison, Apple’s price-to-earnings ratio is 13.

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Re: Amazon (AMZN)

Postby kennynah » Wed Feb 01, 2012 11:21 am

to amazon, earth is only 1/2 the size we know it to be...

puzzles me how a company that has no brick and mortar setups can make such huge losses.
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Re: Amazon (AMZN)

Postby winston » Wed Feb 01, 2012 3:10 pm

Down 9% after hours ...

But the analysts are saying that it's very difficult to build such infrastructure and it could come back.
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Re: Amazon (AMZN)

Postby iam802 » Wed Feb 22, 2012 1:22 am

Image

AMZN dropped to around $172 after its poor earnings back in early Feb.

It has since try to rally but fail to breakout of the kumo resistance.

It is now trading around $182 and is very near the kumo support.

Right above it is both the resistance from Tenkan sen and Kijun sen.

I believe this is a fairly good entry to try to get a short and see if it fell below the kumo support.

Target price $172.
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Re: Amazon (AMZN)

Postby iam802 » Wed Feb 22, 2012 4:01 pm

Not a good news for AMZN

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Many plan to buy iPad 3, including most Kindle Fire owners

http://www.bizjournals.com/sanjose/news ... uding.html
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Re: Amazon (AMZN)

Postby kennynah » Thu Feb 23, 2012 2:01 am

fire kindle cannot hold a candle to iPad.

fire kindle is just an eReader device. even if you pluck in a wifi, it is still very lacking compared to iPad's computing power and s/w application compatibility.

it is comparing a single grape to an XO durian that is iPad.

granted fire kindle is significantly cheaper but why would that be a motivation to buy it if a person wants a handheld computer?

besides, amazon doesn't sell ebooks to 1/2 the world. what for i buy a kindle? it will take up space when i return to asia.
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Re: Amazon (AMZN)

Postby iam802 » Thu Feb 23, 2012 11:11 pm

Just noticed the following stats from Google Finance on AMZN:

.....................................Q4 (Dec '11).....2011
Net profit margin..............1.07%.............1.34%
Operating margin..............1.49%.............1.79%
EBITD margin...................-....................4.18%
Return on average assets...3.38%.............2.92%


Profit margin is pretty thin.
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Re: Amazon (AMZN)

Postby iam802 » Thu Feb 23, 2012 11:25 pm

Amazon Pulls 5000 Independent Titles from Kindle

http://online.wsj.com/article/SB1000142 ... 32716.html
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Re: Amazon (AMZN)

Postby iam802 » Mon Mar 19, 2012 9:59 pm

Image

$AMZN price level is currently right at the kumo.

The kumo is very thin now; suggesting that there is very little support below or resistance ahead.

However, the Ichimoku chart is also showing a small kumo twist suggesting bearish move ahead.

Vested with a SHORT APR CALL spread. Bearish.

Note:

There is also a Bullish Tenkan sen - Kijun sen cross. Given the thin kumo, it can go either way. Hence, my preference for a SHORT CALL spread to minimise my risk.
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Re: Amazon (AMZN)

Postby iam802 » Tue Mar 20, 2012 11:19 am

Improving their warehouse automation with this acquisition.


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Amazon.com to buy Kiva Systems for $775 million

http://www.reuters.com/article/2012/03/ ... 1720120319


(Reuters) - Amazon.com Inc said on Monday it agreed to buy Kiva Systems Inc for $775 million in cash, a deal that will bring more robotic technology to the e-commerce company's giant network of warehouses.

The acquisition, which has been approved by Kiva's stockholders, is expected to close in the second quarter of 2012, Amazon added in a statement.

Kiva develops robots that zip around warehouses, grabbing and moving shelves and crates full of products. The technology helps retailers fulfill online orders quickly and with fewer workers. Companies including Gap Inc, Staples Inc and Crate & Barrel, have used the technology.

Amazon has traditionally used more employees in its warehouses, or fulfillment centers as they are known. However, Kiva's robots have been used by other e-commerce companies acquired by Amazon in recent years, such as Quidsi and Zappos.

"This is a way to improve efficiency," said Scott Tilghman, an analyst at Caris & Company. "Given the scale of Amazon's operations, it makes sense to have this capability in house."

Fulfillment centers are crucial to Amazon's main online retail business. But the company also offers fulfillment services to other merchants, making the warehouses even more important.

"Amazon has long used automation in its fulfillment centers, and Kiva's technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow," said Dave Clark, vice president, global customer fulfillment, at Amazon.com.

Amazon has been spending more on fulfillment in recent years as the company opened lots of new warehouses to handle the rapid growth of its business.

Fulfillment costs as a percentage of revenue rose to more than 9 percent in 2011, from just over 8 percent in 2010, according to Aaron Kessler, an analyst at Raymond James.

"That's been a big focus for investors recently," Kessler said. "It's a big cost. They are shipping so much and increasing volume so they need to figure out how to get more leverage out of these fulfillment centers.

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2. The trend will END but I don't know WHEN.

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