Well, everything seemed to look rosy for Amazon.com (AMZN) leading up to its 3rd quarter earnings report after the bell today.
Revenues in the quarter reached $7.56 billion, up 39% year over year, on EPS of 51 cents per share. This beat the Zacks Consensus Estimates of $7.352 billion and 48 cents per share, respectively. It also followed a strong Thursday of trading, where AMZN share rose nearly 4% to flirt with its all-time-high trading price of around $165 per share.
But all that came to an end as the earnings numbers came out, and operating expenses in the quarter surpassed 40% to $7.29 billion. In other words, costs more than wiped out the headline figure of +39% in revenue growth. Thus, shares in after-hours trading have fully given back the 4% gain from the day’s session.
A few analysts had been revising estimates upward in the past month, but only slightly — not enough to increase the Zacks Consensus Estimate for the 3rd quarter. Fiscal 2010 estimates have gone up a penny to $2.60 over the past 30 days. However, at the start of the quarter, analysts had expected AMZN would bring in 60 cents per share in the quarter, and fiscal 2010 was supposed to have fetched $2.91 per share.
Amazon.com guided 4th quarter revenues between $12 billion and $13.3 billion — indicating 26-40% growth — on operating income between $360-560 million. The current Zacks Consensus Estimate for the 4th quarter is $12.243 billion. The 4th quarter will also usher in the first holiday shopping season in which the long, protracted recession has been declared over.
Perhaps investors are concerned that iPad will continue to encroach on Kindle’s market share. Perhaps they felt it safe to take earnings now that AMZN stock is around its all-time highs.
As always, our in-depth earnings coverage will be published before the bell tomorrow.
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