Goodnight Amazon: World's Most Overhyped Retailer Misses Top Line

Tyler Durden's picture

All one can say is oops. That margin compression sure does suck:

  • Q4 EPS USD 0.91 vs. Exp. USD 0.88
  • Q4 net sales USD 12.95bln vs. Exp. USD 13.03bln
  • Net sales are expected to be between $9.1 billion and $9.9 billion, or
    to grow between 28% and 39% compared with first quarter 2010
  • Operating income is expected to be between $260 million and $385

We have yet to see snow being blamed for the After Hour stock collapse

And a whole lot of momentum chasers got wiped out all over again. From Dow Jones earlier:

Amazon appears to have pre-earnings bullish bias. About 62,000 calls traded on online retailer, double its average daily volume against 40,000 puts near midday heading into its earnings after the closing bell, according to Trade Alert. "We are seeing a modest bid up in call premium and a reduction in the premium in puts," said Steve Place, a founder of "That indicates to us that the majority of call options were bought today and the majority of puts were sold. That's pretty bullish on today's morning price action." The busiest contract is the weekly $190 strike calls which expire this Friday with volume of 5,070 contracts, Trade Alert data show. Amazon options this morning are pricing in about a 6.4 percent post earnings move in the stock price based on the front month average of the $180 and $185 straddles, Place said. He notes the close-to- close movement historically for Amazon earnings is not that big but the maximum movement for the trading day is quite large.

Full release:, Inc. (NASDAQ:AMZN) today announced financial results for its
fourth quarter ended December 31, 2010.

Operating cash flow increased 6% to $3.50 billion for the trailing
twelve months, compared with $3.29billion for the
trailing twelve months ended December 31, 2009. Free cash flow decreased
14% to $2.52 billion for the trailing twelve months, compared with $2.92
billion for the trailing twelve months ended December 31, 2009.

Common shares outstanding plus shares underlying stock-based awards
totaled 465 million on December 31, 2010, compared with 461 million a
year ago.

Net sales increased 36% to $12.95 billion in the fourth quarter,
compared with $9.52 billion in fourth quarter 2009. Excluding the $139
million unfavorable impact from year-over-year changes in foreign
exchange rates throughout the quarter, net sales would have grown 37%
compared with fourth quarter 2009.

Operating income was $474 million in the fourth quarter, compared with
$476 million in fourth quarter 2009. The unfavorable impact from
year-over-year changes in foreign exchange rates throughout the quarter
on operating income was $18 million.

Net income increased 8% to $416 million in the fourth quarter, or $0.91
per diluted share, compared with net income of $384 million, or $0.85
per diluted share, in fourth quarter 2009.

"Thanks to our customers, we achieved two big milestones," said Jeff
Bezos, founder and CEO of "We had our first $10 billion
quarter, and after selling millions of third-generation Kindles with the
new Pearl e-ink display during the quarter, Kindle books have now
overtaken paperback books as the most popular format on Last
July we announced that Kindle books had passed hardcovers and predicted
that Kindle would surpass paperbacks in the second quarter of this year,
so this milestone has come even sooner than we expected - and it's on
top of continued growth in paperback sales."

Full Year 2010

Net sales increased 40% to $34.20 billion, compared with $24.51 billion
in 2009. The unfavorable impact from year-over-year changes in foreign
exchange rates throughout the year on net sales was $86 million.

Operating income increased 25% to $1.41 billion, compared with $1.13
billion in 2009. The unfavorable impact from year-over-year changes in
foreign exchange rates throughout the year on operating income was $28
million. In 2009, operating income was negatively impacted by a $51
million legal settlement.

Net income increased 28% to $1.15 billion in 2010, or $2.53 per diluted
share, compared with net income of $902 million, or $2.04 per diluted
share, in 2009.



  • is now selling more Kindle books than paperback books.
    Since the beginning of the year, for every 100 paperback books Amazon
    has sold, the Company has sold 115 Kindle books. Additionally, during
    this same time period the Company has sold three times as many Kindle
    books as hardcover books. This is across's entire U.S. book
    business and includes sales of books where there is no Kindle edition.
    Free Kindle books are excluded and if included would make the numbers
    even higher.
  • The Company sold millions of third-generation Kindle devices with the
    new advanced paper-like Pearl e-ink display in the fourth quarter and
    the third-generation Kindle eclipsed "Harry Potter and the Deathly
    Hallows" as the bestselling product in Amazon's history.
  • The U.S. Kindle Store now has more than 810,000 books including New
    Releases and 107 of 112 New York Times Bestsellers. Over 670,000 of
    these books are $9.99 or less, including 74 New York Times
    Bestsellers. Millions of free, out-of-copyright, pre-1923 books are
    also available to read on Kindle.
  • Amazon added to its growing list of "Buy Once, Read Everywhere" Kindle
    apps, launching a Kindle app for Windows Phone 7. In addition, the
    Kindle for Android app was updated to enable users to buy, read and
    sync over 100 Kindle newspapers and magazines. All Kindle apps let
    customers "Buy Once, Read Everywhere"--on Kindle, Kindle 3G, Kindle DX,
    iPad, iPod touch, iPhone, Mac, PC, BlackBerry and Android-based
    devices. All Kindle apps are free and incorporate Amazon's Whispersync
    technology, which allows readers to seamlessly switch between devices.
    With Kindle Worry-Free Archive, books purchased from the Kindle Store
    are automatically backed up online in the Kindle library on Amazon
    where they can be re-downloaded wirelessly for free, anytime.
  • The Company announced Price Check for iPhone, a new price comparison
    app that provides shoppers an easy way to compare in-store prices with
    the low prices from and other online merchants. Shoppers
    can use the app to scan a barcode, snap a picture, or say or type a
    product name to instantly see online prices for that item. Over the
    Black Friday-Cyber Monday weekend, mobile shoppers used Price Check to
    look up prices over a million times. In December, shoppers used the
    app more than two million times to check prices.
  • North America segment sales, representing the Company's U.S. and
    Canadian sites, were $7.21 billion, up 45% from fourth quarter 2009.
  • International segment sales, representing the Company's U.K., German,
    Japanese, French, Chinese and Italian sites, were $5.74 billion, up
    26% from fourth quarter 2009. Excluding the unfavorable impact from
    year-over-year changes in foreign exchange rates throughout the
    quarter, sales grew 29%.
  • Worldwide Media sales grew 12% to $5.23 billion. Excluding the
    unfavorable impact from year-over-year changes in foreign exchange
    rates throughout the quarter, sales grew 13%.
  • Worldwide Electronics & Other General Merchandise sales grew 60% to
    $7.39 billion. Excluding the unfavorable impact from year-over-year
    changes in foreign exchange rates throughout the quarter, sales grew
  • The Company launched, an Italian-language website offering
    customers a vast selection of books, DVDs, video games, music and
    consumer electronics at everyday low prices.'s convenient
    services include Amazon Prime, the membership program with unlimited
    free guaranteed 2-3 day delivery at an annual fee of 9.99 Euros. The
    first product sold on was a Canon Pixma printer to a new
    Prime customer in Turino, Italy.
  • Amazon Web Services (AWS) announced lowered usage pricing on existing
    Premium Support offerings by 50% and added two new support plans to
    meet the needs of developers and enterprises of all sizes and
    technical ability. In addition to the existing Silver and Gold support
    plans, AWS now offers a Bronze support plan for $49 per month and a
    Platinum support plan that provides 15 minute response times and
    dedicated Technical Account Managers.
  • AWS achieved Level 1 Payment Card Industry (PCI) compliance,
    continuing its commitment to providing the security certifications
    developers and enterprises care about. Merchants and other service
    providers can now run their applications on AWS PCI-compliant
    technology infrastructure to store, process and transmit credit card
    information in the cloud.
  • AWS launched Elastic Beanstalk, an easy way for developers to quickly
    deploy applications to AWS and manage applications in the AWS cloud.
    Elastic Beanstalk automatically scales up and down as needed so
    developers don't need to worry about configuring their infrastructure
    requirements in AWS. Unlike existing application containers or
    "platform as a service" offerings that force developers to accept
    infrastructure decisions pre-determined by the vendor, Elastic
    Beanstalk allows developers to "open the hood" to tinker with the AWS
    resources powering their applications. AWS customers can now choose to
    have as much automation or as much control as they wish.

Financial Guidance

The following forward-looking statements reflect's
expectations as of January 27, 2011. Our results are inherently
unpredictable and may be materially affected by many factors, such as
fluctuations in foreign exchange rates, changes in global economic
conditions and consumer spending, world events, the rate of growth of
the Internet and online commerce and the various factors detailed below.

First Quarter 2011 Guidance


  • Net sales are expected to be between $9.1 billion and $9.9 billion, or
    to grow between 28% and 39% compared with first quarter 2010.
  • Operating income is expected to be between $260 million and $385
    million, or between 34% decline and 2% decline compared with first
    quarter 2010.
  • This guidance includes approximately $140 million for stock-based
    compensation and amortization of intangible assets, and it assumes,
    among other things, that no additional business acquisitions or
    investments are concluded and that there are no further revisions to
    stock-based compensation estimates.

A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and
will be available for at least three months at
This call will contain forward-looking statements and other material
information regarding the Company's financial and operating results.

These forward-looking statements are inherently difficult to predict.
Actual results could differ materially for a variety of reasons,
including, in addition to the factors discussed above, the amount that invests in new business opportunities and the timing of those
investments, the mix of products sold to customers, the mix of net sales
derived from products as compared with services, the extent to which we
owe income taxes, competition, management of growth, potential
fluctuations in operating results, international growth and expansion,
the outcomes of legal proceedings and claims, fulfillment center
optimization, risks of inventory management, seasonality, the degree to
which the Company enters into, maintains and develops commercial
agreements, acquisitions and strategic transactions, and risks of
fulfillment throughput and productivity. Other risks and uncertainties
include, among others, risks related to new products, services and
technologies, system interruptions, government regulation and taxation,
payments and fraud. In addition, the current global economic climate
amplifies many of these risks. More information about factors that
potentially could affect's financial results is included in's filings with the Securities and Exchange Commission
("SEC"), including its most recent Annual Report on Form 10-K and
subsequent filings

Our investor relations website is
and we encourage investors to use it as a way of easily finding
information about us. We promptly make available on this website, free
of charge, the reports that we file or furnish with the SEC, corporate
governance information (including our Code of Business Conduct and
Ethics), and select press releases and social media postings.


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LongSoupLine's picture

Down periscope, prepare for dive.

whatsinaname's picture

Where is the bald guy who runs this warehouse ?

Did I just see him duck to go and get a cold one ?

Ray1968's picture

Gold is down 7% YTD. Amazon down 10.5% in 30 seconds.

Which would you rather own??

SheepDog-One's picture

I decide what I want to own by looking at what escaping dictators pile on their plane...and its not Wall St paper or SPY futures.

Dr. No's picture

Gold is not just for dictators!  It is also for wanna be/future world dominators like myself.

Rahm's picture

In a completely unrelated note, Interpol has just released a red notice for Dr. No. 

william the bastard's picture

Wouldn't model my behavior on dictators that need to escape their homeland.

SheepDog-One's picture

Oh you wouldnt? Well keep buying the fuckin dip on bullshit Wall St paper then!

ColonelCooper's picture

Holy Shit Batman!!  You are one of my favorite dudes on this whole site, so you have to listen to me:

If your job isn't one of those that requires peeing in a cup every so often, you need to find a giant fatty and some Zac Brown or Gordon Lightfoot or the like....

If it is, you need three (no less) double shots of Maker's Mark, followed by a consistant oral drip of whatever the Hell is your favorite....

Shit is really starting to get real.  Toss em back while you can...

ColonelCooper's picture

You are absolutely right William!  Most dictators got where they are because they have lower than average intelligence.

Oh.. Were you talking Moral Authority and a conscience thing???  Hope you got some stout effing walls and a ton of money (gold or silver) to pay your Blackwater types.  No?  Maybe you should Google "cuckold".

william the bastard's picture

""Maybe you should Google "cuckold".""

Why? They show your face there?

Fazzie's picture

 Hey thats a great idea for a new indicator.

 The DDI (deposed dictator index)!

 Its breaking out for sure!

Michael's picture

Priceless! And fore everything else, there's Mastercard.

whatz that smell's picture

this very moment the forces of evil are conferenced and plotting the next leg up. buy the hot-chick-from-ipanema dip, bitchez!

tmosley's picture

I wonder if Harry or Robo got out?

I'm sure they will tell us they did, from the public terminals in their respective welfare offices.

SheepDog-One's picture

Oh surely we'll hear tomorrow about how luckilly their super intelligent brains told them to sell before the drop. Rear view mirror trading those guys do is the best!

Fazzie's picture

 Cramer will go to his default "bad call after furious pumping" defense, IE, the market got it wrong, he was and is still right. The market only gets it right when running momo stocks to ridiculous PEs during depressions, it seems.

DonnieD's picture

They sold at the peak and then went short. Obviously.

outamyeffinway's picture

Life without Amazon, would be terrible!

whatsinaname's picture

Will the bearded bald guy help out the clean shaven bald guy ?

Are they at the warehouse hatching out a rescue plan ?

TruthInSunshine's picture

They couldn't even make NET SALES on low expectations in a direct, mainlined Ben Bernank HOPIUM infused world?


SheepDog-One's picture

Whats next, mega steroid infused MLB players striking out at T-Ball??
WTF! And I dont mean Barrys new slogan initials.

william the bastard's picture

AMZN up 315% since nov 2008. Gold up 71%

JP McManus's picture

Were you buying AMZN in Nov 08?  Because I was buying gold.

william the bastard's picture

Neither. Bought Dana Corp (DAN) and Amer Axle (AXL) then.

ElvisDog's picture

Yeah, that's funny. The very definition of cherry-picking data points. I've got better things to do, but I'm pretty sure I can pick another date that shows gold far outperforming AMZ.

Clockwork Orange's picture

This is bad.  At least the Bald Bearded guy is still behind the curtain - the P/E will surely only get whacked from 75 to 68 or so ... phew.

whatsinaname's picture

Who is the bald guy who runs this warehouse ? Did he lose some more of his hair ?

Phineas Gage's picture

Accurate way of looking at it.

The Axe's picture

This is a shock, that is a bad number, on a over-hype stock...Is all the heloc money used up, ???

NOTW777's picture

so that was christmas. dont worry cnbc set to ask bill c how he landed monica

TruthInSunshine's picture

Too much snow & cold weather made shopping on Amazon difficult.

besodemuerte's picture

People buy their iProducts from rather than, shame.  Oh well, we still have NFLX and APPL to keep us company in the upper atmosphere.

unwashedmass's picture


well, what a surprise! i mean, just cause the peasantry has no money left....what's wrong with these guys -- don't they know about the changes in FASB....they should have just bought a few crates of MBS (they could have gotten those ones the banks are trying to burn in Delaware for pennies)....

and say they have assets worth two or three billion. whatever they needed to generate the blowout...

what's wrong with Jeff? Doesn't he read the papers?

HarryWanger's picture

AAPL is very cheap here relatively speaking. Whenever I hear people mention AAPL in the same breath as NFLZ or AMZN, I have to laugh. If it weren't for the Jobs uncertainty, AAPL would be knocking on 400/share right now. Even MSFT said the iPad is eating into their sales. 

Mr Lennon Hendrix's picture

OMG Harry you bring out the worst in me.  I wrote you into a kids show.  You were trying to get investors into a van with some candy apples, and then I though, 'Oh yeah, HarryfuckinWanger is a made up character by some dude with too much time on his hands.

Hedgetard55's picture

AAPL is done, Harry. Stick a fork in it. Better take profits while you can. I see a flash crash in it's very near future.

ColonelCooper's picture

When I buy shit from Apple, it is 100% frivolous.  When I buy shit from Amazon it generally is :

- Books

- Canned goods in flats like Tuna or Peanut Butter, most any dry goods/canned groceries/occasional grain buckets/oil/etc....


I live in a very rural area, one where it takes two and a half hours one way to get to a big box store. Amazon has always been: fair, lightening quick shipping, larger selection, good volume pricing etc.  

I would really hate to see them go down the shitter. 

pods's picture

I would hate to see them go down as well.  Royal Purple oil in a 5 gallon pail for $118 with free shipping, you can't beat that with a stick.


tmosley's picture

You are now HarareWanger.

You can buy some AAPL at $500000

Plainview's picture

I like the way you polish up Jobs as much as possible.

It's not an "uncertainty" - it's that he's probably going to die and the company is a turd without him. If you think some Joe Schmoe could stand on the stage, flip out an iPad and that people will trust him enough to splurge $500 on it you're crazy and you're underestimating the brand of Jobs which is actually, bizarrely, superior to that of Apple. People inherently trust him and buy his enthusiasm and evangelistic urging as legitimate. That is not a feat easily repeated. When he's gone they will revert to type and bring products to market that should never have made it that far. 

erik's picture

Let me be the first to say that my hometown companies have really done their jobs so far this earnings season:

F5 Networks




All down...

TruthInSunshine's picture

Don't forget about Boeing's new Spruce Goose.

erik's picture

Unfortunately, we can't claim Boeing anymore since they moved the headquarters to Chicago.  However, we can add Starbucks to the list.  We'll just have to see if Costco can break the Seattle negativity. 

TruthInSunshine's picture

This is why Kurt Cobain committed suicide.