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Here Is How Amazon's Ugliest Quarter In Years Looked Like In Six Charts

Tyler Durden's picture




 

Just when we thought "the world's marketplace" Amazon couldn't possibly report any uglier quarterly numbers, it goes and proves us wrong. First, it reported an EPS loss of $0.27, vs the $0.15 expected as a result of ($126) million in Net Income. The operating loss was "only" $15 million compared to an expectation of $64 million, however this appears the result of pulling forward wales into Q2 since the Company also announced that the Q3 operating loss would be a whopping $410-$810 million, what would be the biggest operating loss in years. That this will happen even as AMZN expects net sales to grow between 15% and 26% from a year ago to $19.7 - $21.5 billion is truly disturbing.

As to what is really going on with the business, the following charts should explain it all, starting with perhaps the most important one of all. In Q2, AMZN's LTM Operating Margin just dropped to 0.8%, quite possibly the lowest print since Lehman if not before.

 

Not only is Amazon growing sales, it is also growing its army of part-time workers, which in Q2 rose to a record 132,600, up a massive 37% from 97,000 a year ago. However, no such luck for the company's global net sales growth, which just dipped back to 22%: the lowest number in recent history.

 

Thos curious how the company's business is doing on a net and operating income basis in the last 4 years, here is the answer.

 

An uglier picture is revealed when looking only at the all important operating margin: at 0.1% in Q2, it was only the 3rd time AMZN has had a negative quarterly margin since Lehman.

 

To avoid the confusion of seasonality, we show just Q2 in the past five years. The Operating and Net Income trends are clear.

 

But by far the worst trend is that in operating margin. It needs no commentary.

 

* * *

Remember, it's all the snow's fault: none of the above has anything to do with the state of the US consumer.

 

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Thu, 07/24/2014 - 16:53 | 5000387 Squid Viscous
Squid Viscous's picture

Don't worry - wait for the CC- Bezos will polish this turd of a qtr. like the gay, frustrated astronaut that he is...

Thu, 07/24/2014 - 16:55 | 5000398 hedgeless_horseman
hedgeless_horseman's picture

 

 

Frustrated?

Thu, 07/24/2014 - 16:59 | 5000417 Squid Viscous
Squid Viscous's picture

well his last spaceship attempt crashed and burned... maybe he can work for NASA when AMZN goes tits up?

Thu, 07/24/2014 - 17:00 | 5000428 Obchelli
Obchelli's picture

But, But, But stock price is in mid 300-400 range...

 

Man I though this was ov ervalued at 20...

Some companies just get that "luck" - no matter what they do they are "darlings" of big money manipulators and short squuzers satans out their

Thu, 07/24/2014 - 17:05 | 5000436 Supernova Born
Supernova Born's picture

They seem to be attempting to hold the line against price deflation in discretionary goods as food and energy inflation leave consumers with less to spend.

So? No sale.

Thu, 07/24/2014 - 17:07 | 5000453 quintago
quintago's picture

I'd like to think my wife had something to do with this. Usually I'd come home 3-4x a week and see an Amazon box sitting around. Now Google Shopping Express is at our house 4-5x a week dropping crap off.

Thu, 07/24/2014 - 17:13 | 5000473 Squid Viscous
Squid Viscous's picture

exactly, Bezos has been "building a moat" around a tiny margin/no barriers to entry business, same with "web services" is he gonna beat out CRM, CSCO, HPQ, IBM etc. at their own game? ... or just keep cutting the price until everyone loses...what a fuk'n joke...

Thu, 07/24/2014 - 17:13 | 5000488 Herd Redirectio...
Herd Redirection Committee's picture

Business model:

Step 1: Force all competitors into bankruptcy.

Step 2: Avoid going bankrupt in the process.

Step 3: Profit.

Thu, 07/24/2014 - 17:18 | 5000512 CrashisOptimistic
CrashisOptimistic's picture

He could make that EPS loss look bigger if he bought back some shares.

Thu, 07/24/2014 - 17:36 | 5000663 NoDebt
NoDebt's picture

Business model:  Lose money on every sale but make it up in volume.

Thu, 07/24/2014 - 18:09 | 5000911 Handful of Dust
Handful of Dust's picture

The obvious ones:

1) two massive postal rate increases in one year;

2) internet sales tax;

3) loss of the private sector Middle Class buyers who will pay more for something Brand New and 2-day delivery with Prime; and

4)...i forgot #4 but it's there.

 

A seller can ship a 1 pound item (dress, etc) to NYC thru their chinese post office with signature confirm cheaper in many cases then a seller in USA can ship it from what my neighbor say swho used to sell old records and phonograph equipment before he went belly up last year.

Thu, 07/24/2014 - 17:19 | 5000517 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

What?  You got a problem with a measley 560 P/E?

Fri, 07/25/2014 - 21:02 | 5006060 DC Exile
DC Exile's picture

You mean the big CIA government contract Amazon scored didn't help?

Buying the Washington Post was supposedly Bezos (Amazon's) coming out as a true bedfellow in the American facist playpen.

Give it some time, Amazon's numbers will stabilize the more it sucks off the surveillance state tit. They will be TBTF and propped up like the rest of the corrupt corporate government loving-scum.

http://www.informationweek.com/cloud/infrastructure-as-a-service/amazon-...

http://www.cio.com/article/2383569/government-use-of-it/what-the-cia-pri...

Thu, 07/24/2014 - 16:59 | 5000423 max2205
max2205's picture

Jeff is doing a crappy job making up earnings reports

Thu, 07/24/2014 - 16:57 | 5000413 Charles The Ham...
Charles The Hammer Martel's picture

Capital One had a great quarter. All kinds of new debt going around. But no one is buying anything. Strange indeed. Has anyone looked at a ten year chart of the Down Jones and seen how the volume is looking the past three months? Shocking to say the least. I gove this rickshaw ride six months tops before either the wheels fall off or the chinese man pulling the cart gets stabbed by a Honduran invader.

Thu, 07/24/2014 - 17:39 | 5000674 IANAE
IANAE's picture

Retail is suffering all over...the fact that AMZN can't escape the falling tide is confirmation of the *excellent* economic recovery.

Thu, 07/24/2014 - 16:59 | 5000419 TheSecondLaw
TheSecondLaw's picture

What happens to the books that we bought for Kindle?

Thu, 07/24/2014 - 17:01 | 5000429 NOTaREALmerican
NOTaREALmerican's picture

They still won't be read (until somebody makes a app that transmits the words directly into the brain, most kindle books will remain unread forever).

Thu, 07/24/2014 - 16:59 | 5000421 TheRideNeverEnds
TheRideNeverEnds's picture

It was just the weather, once things warm up the green shoots will grow and propel the economy to escape velocity; straight to the moon!

Thu, 07/24/2014 - 16:59 | 5000424 NOTaREALmerican
NOTaREALmerican's picture

Look like a strong buy to me. 

Thu, 07/24/2014 - 17:45 | 5000726 Navymugsy
Navymugsy's picture

Goldman says "conviction buy of the century!"

Thu, 07/24/2014 - 21:22 | 5001793 Winston Churchill
Winston Churchill's picture

Well, they certainly should be convicted for that advice , so they are partly

right.

What is it with Bezos and Musk ?

Can't people tell  who is a snake oil salesmen anymore ?

Thu, 07/24/2014 - 17:06 | 5000434 ZerOhead
ZerOhead's picture

Since market valution has almost nothing to do with earnings these days why are these companies still forced to divulge this proprietary and often embarrassing information to the public?

You don't see this kind of thing happening in The UK right now where the AAIB (Air Accidents Investigations Branch) are busy listening to the final moments of the MH17 cockpit voice recorder.

"They have the kit to analyse in minute detail what can be heard in the last few minutes of flight MH17. The information is incredibly sensitive so investigators gather in a sealed room so that only those who should be listening can listen."

http://www.bbc.com/news/uk-28457759

 

Now THAT'S how you keep bad information from hitting the streets. Clearly Amazon is in need of "The Kit".

Thu, 07/24/2014 - 18:56 | 5001205 jez
jez's picture

Talking of the UK:

 

The operating loss was "only" $15 million compared to an expectation of $64 million, however this appears the result of pulling forward wales into Q2

 

I have to say that it seems a bit unfair to drag Wales into it. And while it's not a big country, I'm surprised that all of it would fit into Amazon's Q2. Even more surprised that it's worth only $49 million.

Thu, 07/24/2014 - 17:03 | 5000435 flyonmywall
flyonmywall's picture

My wife keeps ordering from these fuckers, any time she remembers something. So, they get to pay for 2 day delivery (prime membership), every time she remembers some book or doo-dad that she wants/needs.

No wonder they are losing money. How much is 2 day shipping on a 6.99 book or oven glove?

 

Thu, 07/24/2014 - 17:08 | 5000459 NOTaREALmerican
NOTaREALmerican's picture

Well, right now, but when they perfect that delivery rocket, the item will come directly through your roof at almost no cost.  

Thu, 07/24/2014 - 17:16 | 5000506 Herd Redirectio...
Herd Redirection Committee's picture

First good post! 

Thu, 07/24/2014 - 17:15 | 5000444 SloMoe
SloMoe's picture

Tell me, what date did Amazon start to collect states' sales tax? Doesn't seem to have hurt sales. Oh. Yeah. Profits. Whoops....

 

I guess when you have your own spaceship and swarm of drones, you don't need no stinkin' profits...

Thu, 07/24/2014 - 20:20 | 5001583 daveO
daveO's picture

The second reason I quit. Forgot about that.

Thu, 07/24/2014 - 17:13 | 5000460 Bam_Man
Bam_Man's picture

"Already priced in". It's only $358 a share. It was over $400 before the previous quarter's big miss. lol.

Thu, 07/24/2014 - 17:14 | 5000487 SloMoe
SloMoe's picture

I can't remember a quarter since about 2007 that Amazon hasn't missed their numbers. Either revenues miss, or "earnings" miss. See the trend. They are a retailer. They must choose one or the other...

Thu, 07/24/2014 - 17:18 | 5000503 Bam_Man
Bam_Man's picture

No earnings, no dividend, a ridiculously leveraged balance sheet and this pig is still going to trade at over $330 a share. Gotta love this "market". No bubbles here!

Thu, 07/24/2014 - 17:10 | 5000466 CIABS
CIABS's picture

"Here Is How Amazon's Ugliest Quarter In Years Looked Like In Six Charts"

 

I'm really sorry to be this way, but we don't say "how something looked like".  We say "how something looked".

Thu, 07/24/2014 - 17:11 | 5000476 NOTaREALmerican
NOTaREALmerican's picture

Like, dude,  epic fail.   Totally.

Thu, 07/24/2014 - 19:12 | 5001279 Zog the Bastiat
Zog the Bastiat's picture

I'm really sorry to be this way, but "you really haven't any idea how much of a loser you look like"

Thu, 07/24/2014 - 19:22 | 5001343 CIABS
CIABS's picture

What you put in quotes there is correct, unlike the headline.  Nicely done.

Thu, 07/24/2014 - 17:12 | 5000483 edifice
edifice's picture

Are we getting it, yet? No one has any fucking money to spend, except on bare necessities.

Thu, 07/24/2014 - 17:15 | 5000502 NOTaREALmerican
NOTaREALmerican's picture

Well, and automobile bling.    Does Amazon sell cars?

Thu, 07/24/2014 - 17:23 | 5000563 CrashisOptimistic
CrashisOptimistic's picture

Pretty much.  Cars sell to people who aren't going to pay back the loan.

Everything you need to know was in that housing report this morning.  No buyers.  And they revised previous months, because I guess the buyers gave the houses back to the sellers and moved their furniture back out.

I mean, who can believe this shit?

Thu, 07/24/2014 - 17:15 | 5000491 AGoldhamster
AGoldhamster's picture

I have completly stopped buying at Amazon, Ebay etc. Prefer to support local retailers and shops instead of some mega oligarchy company CEOs, HFs, banks etc.

Prefer to support humans working hard rather than online monsters sucking the lifeblood out of local infrastructure.

If everybody buys at Amazon - at some point you have every second city looking like Detroit.

Globalism is good for the oligarchs and money lords and money changers - but it brings just tears and joblessness to the local communities.

Hope more sheeple are gonna wake up and stop buying at those monsters.

Thu, 07/24/2014 - 19:31 | 5001373 AdvancingTime
AdvancingTime's picture

 It is hard to see why Amazon has any fans when you consider how they abuse and exploit the brick and mortar stores that line streets throughout America. These are the stores that employ our family members, support little league teams in the community, and add value to our lives.

These stores build or lease space, buy supplies from the other local businesses, and pay both sales and real-estate taxes. While Amazon sends out the signal that their customers are smart, forward thinking, and upscale they exploit America and have an evil side, this is a side we should and must recognize. More on this subject below.

 http://brucewilds.blogspot.com/2013/10/amazon-not-answer.html

Thu, 07/24/2014 - 20:16 | 5001563 daveO
daveO's picture

Ebay's new slogan, 'Support your local shoplifter.'

Thu, 07/24/2014 - 17:13 | 5000492 Irrational number
Irrational number's picture

Amazon is so yesterday...If you take into consderation how they ban sellers on their platform no wonder people look elswere

Thu, 07/24/2014 - 17:19 | 5000516 Ghostdog
Ghostdog's picture

How many fucking times do I have to tell you idiots! People are not going to go out and shop at Amazon in bad weather!

Thu, 07/24/2014 - 20:21 | 5001585 jez
jez's picture

Good point. Adjusted for rain, or absence of rain, or sun or floods or plagues of locusts or all of the above, they musta had a great quarter.

 

The weather hates your freedoms. That's the problem that you will not face.

Thu, 07/24/2014 - 17:30 | 5000609 magnumpk
magnumpk's picture

Negative operating margin not a problem.  They can make it up on volume

Thu, 07/24/2014 - 18:07 | 5000877 IANAE
IANAE's picture

A+ ...very funny, epic in fact.

 

... just like GM, without the recalls...

Thu, 07/24/2014 - 18:07 | 5000892 buzzsaw99
buzzsaw99's picture

that seems to be the plan

Thu, 07/24/2014 - 20:29 | 5001615 ejmoosa
ejmoosa's picture

http://www.tv.com/shows/i-love-lucy/the-million-dollar-idea-17116/

 

They lose money on every jar, but plan to make it up on volume.

Thu, 07/24/2014 - 17:45 | 5000675 dobermangang
dobermangang's picture

I noticed that some prices were higher there on things I bought in the recent past.   I use the site:  http://www.camelcamelcamel.com  to see how prices on items fluctuate over the year at Amazon.  That site can save you lots of money if you need to buy stuff from Amazon.

 

Here's a couple examples on how prices change over time on items at Amazon:

Adobe Photoshop Elements 12 price range:

http://camelcamelcamel.com/Adobe-65225054-Photoshop-Elements-12/product/...

LG TV 

http://camelcamelcamel.com/LG-Electronics-42LN5400-42-Inch-1080p/product...

CoQ10

http://camelcamelcamel.com/Qunol-Ultra-CoQ10-Absorption-Coenzyme/product...

Nexus 10

http://camelcamelcamel.com/Google-Nexus-10-Wi-Fi-only/product/B00ACVI202...

Just search for whatever item you're shopping for.  The graph and price range will give you and idea if it's a bargain.

FWIW: I always use their slow free shipping method.  I usually get the items in 2 days anyway.

Thu, 07/24/2014 - 18:50 | 5001164 Bear
Bear's picture

Thanks for the link ... already using now

Thu, 07/24/2014 - 20:14 | 5001550 daveO
daveO's picture

Why only Amazon, I wonder. I actually caught BBY lowering a TV price within a month. I called them, about their price guarantee, and got the $20+ back. Most amazing thing ever.

Thu, 07/24/2014 - 17:59 | 5000830 ejmoosa
ejmoosa's picture

I just had someone ask me why Wal-mart is so empty.

I told them the economy sucks, but the media is in denial.

Guess they aren't buying online either.

 

Thu, 07/24/2014 - 18:07 | 5000902 buzzsaw99
buzzsaw99's picture

p/e > 500

shine, shine, you swim so fine

but miss one stroke and your ass is mine...

Thu, 07/24/2014 - 18:25 | 5000998 skank
skank's picture

Classic Sesame Street - The Count Counts Telephone Rings (full version)
http://www.youtube.com/watch?v=vC0uvUuXVh8 

Thu, 07/24/2014 - 18:37 | 5001070 TheHound73
TheHound73's picture

They need to implement Bitcoin as a payment method.

Thu, 07/24/2014 - 18:46 | 5001138 razorthin
razorthin's picture

Inflation you can't pass on to the consumer is a bitch bichez.

Thu, 07/24/2014 - 18:47 | 5001148 starman
starman's picture

"Net" like in a fish net?

Thu, 07/24/2014 - 19:29 | 5001365 AdvancingTime
AdvancingTime's picture

Amazon specializes in hype and not profits!  Words like "evolving" are used to describe Amazon's business model, a better word might be undefined. Regardless Amazon rolls on. Pointing towards gaining synergy as they continue to buy companies, some unproven. The revenues from these companies add to their growth but still no profits exist. Beware Amazon is far from transparent.

I contend this growth mask a weakness at their core? If they are indeed a distribution company their stock should be trading at around 18 times earnings. When you look for a P/E ratio on Amazon you find NA because the company makes no money. Another key weakness is that new competition can now cheaply and easily replicate the most profitable parts of Amazon and cherry pick much of their future potential. The bigger they are, the harder they fall, it is only a question of time. More on this subject below.

 http://brucewilds.blogspot.com/2013/10/amazon-not-answer.html

Thu, 07/24/2014 - 20:08 | 5001520 daveO
daveO's picture

The sales slump was predicted by, at least, me when they raised the free shipping threshold to $35. I've switched over to Ebay. 

Thu, 07/24/2014 - 19:33 | 5001384 MathWins
MathWins's picture

I don't think Amazon has ever made a profit.  EVER.  They must have deep pockets.

Thu, 07/24/2014 - 22:11 | 5001984 Wild Theories
Wild Theories's picture

Nah, you don't need profits these days, all you need is a big watermelon truck, erm I mean market share.

Go to the stock market and turn that into market cap, and your stock options will turn into all the personal profits you need.

Screw profits for the company and the people working for the company.

Do NOT follow this link or you will be banned from the site!