DOW JONES NEWSWIRES
Amazon.com Inc.'s (AMZN) second-quarter earnings fell 10% as
unusual items masked strong revenue growth.
The Internet retail giant's shares fell 5.8% to $88.23 in
after-hours trading, even though earnings topped Wall Street
expectations and third-quarter revenue guidance was roughly in line
with analysts' views. The stock, having nearly tripled since late
November, hit a 52-week high earlier Thursday.
Amazon has been grabbing customers from competitors online and
off, shrugging off worries about the economic downturn and margin
pressures from low prices. The company has also scored with its
Kindle electronic book reader, though its recent removal of George
Orwell books without users' permission - ironic because the author
warned of a dystopian future when just such things might be
possible - may chill demand for a spell.
Signaling its confidence, Amazon this week made its biggest
acquisition deal ever, announcing Wednesday it will buy shoe
retailer Zappos.com Inc. for $847 million in cash and stock.
The company reported earnings of $142 million, or 32 cents a
share, compared with $158 million, or 37 cents a share, a year
earlier. Analysts expected 31 cents, according to a Thomson Reuters
poll.
The latest quarter included a $51 million charge for a
settlement with Toyrsrus.com LLC, while the year-ago period
included a $53 million noncash gain from the sale of its European
DVD rental business. The stronger dollar also shaved $30 million
from pretax income.
Revenue climbed 14% to $4.65 billion. Excluding currency
fluctuations, the figure would have risen 20%. In April, Amazon
said it expected revenue of $4.3 billion to $4.75 billion.
Electronics and other general merchandise posted the biggest
gain, rising 35% overall, while media - which accounted for just
over half of sales - eked out a 1% rise. The segments would have
grown 41% and 7%, respectively, without the effect of the stronger
dollar.
Gross margins widened to 24.4% from 23.8%.
For the third quarter, Amazon expects net sales of $4.75 billion
to $5.25 billion, up 11% to 23% from a year earlier. Wall Street
expects revenue of $4.92 billion. The company also sees operating
income down 22% to up 36%, resulting in a range of $120 million to
$210 million.
-By Jay Miller, Dow Jones Newswires; 212-416-2355;
jay.miller@dowjones.com