Amazon Slides After Missing Revenues Expectations, Guides Much Lower

Tyler Durden's picture




 

Amazon slides 10% after hours as it reports much weaker revenues of $17.43 billion on expectations of $18.26 billion. EPS are not really comparable but appear to beat EPS of $0.16 on Exp. of $0.38. This may not be apples to apples. More importantly, the company guides Q1 to Operating Loss of $200MM to Income of income of $100MM, on Wall Street Consensus of $268MM, and guides to Q1 revenue of just $120-$13.4 billion on Estimates of $13.4 billion: pretty wide range there... This is merely the latst time that the company has disappointed materially, yet Wall Street keeps giving it the benefit of the doubt, on hopes that the Kindle will finally become an iPad-like device. How much longer? Yet the take home message is that the US consumer, contrary to rumors otherwise, is actually not doing all that well.

The good news: operating margin doubles from Q3's 0.7%. The bad news: operating margin is 1.5%:

Amazon number of employees: up, up and away, at 56,200; this compares to 33,700 a year ago.

AMZN After hours:

Full release:

Amazon.com, Inc. (NASDAQ:AMZN - News) today announced financial results for its fourth quarter ended December 31, 2011.

Operating cash flow increased 12% to $3.90 billion for the trailing twelve months, compared with $3.50 billion for the trailing twelve months ended December 31, 2010. Free cash flow decreased 17% to $2.09 billion for the trailing twelve months, compared with $2.52 billion for the trailing twelve months ended December 31, 2010.

Common shares outstanding plus shares underlying stock-based awards totaled 468 million on December 31, 2011, compared with 465 million a year ago.

Net sales increased 35% to $17.43 billion in the fourth quarter, compared with $12.95 billion in fourth quarter 2010. Excluding the $101 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 34% compared with fourth quarter 2010.

Operating income was $260 million in the fourth quarter, compared with $474 million in fourth quarter 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $5 million.

Net income decreased 58% to $177 million in the fourth quarter, or $0.38 per diluted share, compared with net income of $416 million, or $0.91 per diluted share, in fourth quarter 2010.

“We are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices this holiday season, making Kindle our bestselling product across both the U.S. and Europe,” said Jeff Bezos, founder and CEO of Amazon.com. “Our millions of third-party sellers had a tremendous holiday season with 65% unit growth and now represent 36% of total units sold.”

Full Year 2011

Net sales increased 41% to $48.08 billion, compared with $34.20 billion in 2010. Excluding the $1.09 billion favorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales would have grown 37% compared with 2010.

Operating income decreased 39% to $862 million, compared with $1.41 billion in 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the year on operating income was $53 million.

Net income decreased 45% to $631 million in 2011, or $1.37 per diluted share, compared with net income of $1.15 billion, or $2.53 per diluted share, in 2010.

Highlights

  • During the nine-week holiday period ending December 31, 2011, Kindle unit sales, including both the Kindle Fire and e-reader devices, increased 177% over the same period last year.
  • Kindle Fire is the #1 bestselling, most gifted, and most wished for product across the millions of items available on Amazon.com since its introduction 17 weeks ago.
  • Amazon launched Kindle Stores at Amazon.it and Amazon.es. Kindle moved to the top of the bestseller list on launch day in both countries and held the top spot this holiday season. The new Kindle was also the bestselling product on Amazon.co.uk, Amazon.de and Amazon.fr.
  • Amazon.com announced the Kindle Owners’ Lending Library, a benefit of Prime membership that offers over 80,000 books to borrow for free – including over 100 current and former New York Times bestsellers – as frequently as a book a month, with no due dates.
  • Kindle Direct Publishing (KDP) announced KDP Select, an annual fund of at least $6 million dedicated to independent authors and publishers who participate in the Kindle Owners’ Lending Library. In December alone, customers borrowed 295,000 KDP Select titles, and KDP Select has helped grow the total library selection of books by over 16X.
  • Amazon continued to expand its catalog of title offerings for Prime Instant Video, announcing licensing agreements with Twentieth Century Fox Television Distribution, which added the popular FOX and FX television shows Glee and Sons of Anarchy, and Disney-ABC Television, which added popular television shows including Lost and Grey’s Anatomy. These deals bring the total number of Prime Instant Videos to more than 13,000 movies and TV shows from partners such as CBS, Fox, NBCUniversal, Sony, Warner Bros., PBS, ABC-Disney and many more.
  • The number of videos purchased or rented from Amazon Instant Video and the number of Amazon Instant Video customers both more than doubled year-over-year in the fourth quarter. In addition, the number of Prime Instant Video streams increased nearly 300% in the fourth quarter compared to the third quarter.
  • Amazon Appstore for Android customers nearly tripled in the fourth quarter compared to the third quarter. In addition, customers downloaded more apps from the Amazon Appstore during the fourth quarter than they had during all previous quarters combined.
  • North America segment sales, representing the Company’s U.S. and Canadian sites, were $9.90 billion, up 37% from fourth quarter 2010.
  • International segment sales, representing the Company’s U.K., German, Japanese, French, Chinese, Italian and Spanish sites, were $7.53 billion, up 31% from fourth quarter 2010. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 29%.
  • Worldwide Media sales grew 15% to $6.01 billion. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 14%.
  • Worldwide Electronics and Other General Merchandise sales grew 48% to $10.91 billion. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 47%.
  • Amazon Web Services (AWS) announced the launch of its new South America (Sao Paulo) Region and U.S. West (Oregon) Region, bringing the total to eight geographic regions worldwide to which the company has deployed its global cloud computing services.
  • AWS announced the launch of Amazon DynamoDB, a fully managed NoSQL database service that provides extremely fast and predictable performance with seamless scalability. With a few clicks in the AWS Management Console, customers can launch a new Amazon DynamoDB database table, scale up or down their request capacity for the table without downtime or performance degradation, and gain visibility into resource utilization and performance metrics.
  • AWS announced that customers can now run their Microsoft Windows Server applications within the AWS Free Usage Tier – a program designed to help new AWS customers get started in the cloud. Developers and businesses with Windows Server applications can take advantage of 750 hours of Amazon Elastic Compute Cloud (Amazon EC2) Micro Instance usage per month, at no charge for a one-year period.

Financial Guidance

The following forward-looking statements reflect Amazon.com’s expectations as of January 31, 2012. 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 2012 Guidance

  • Net sales are expected to be between $12.0 billion and $13.4 billion, or to grow between 22% and 36% compared with first quarter 2011.
  • Operating income (loss) is expected to be between $(200) million and $100 million, or between 162% decline and 69% decline compared with first quarter 2011.
  • This guidance includes approximately $200 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.
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Tue, 01/31/2012 - 17:07 | 2114179 The trend is yo...
The trend is your friend's picture

Bullish...this should be good for a pop tomorrow

Tue, 01/31/2012 - 17:16 | 2114226 TheGameIsRigged
TheGameIsRigged's picture

I agree...BUY BUY BUY!!!  

 

Tue, 01/31/2012 - 17:23 | 2114253 I Am Not a Copp...
I Am Not a Copper Top's picture

BUY IT ALL!!  BTFDBTFDBTFDBTFDBTFDBTFDBTFDBTFDBTFDBTFDBTFDBTFDBTFD!!!!!

Tue, 01/31/2012 - 17:38 | 2114316 Alex Kintner
Alex Kintner's picture
The word's out. Your union buddies are talking. Get me in at a 45 degree angle and I mean all the way in! Slash and burn, buy everything you can get up to 22. Then call me. When I get the sonofabitch who leaked this I'm gonna kill him! I'm gonna tear his eyeballs out, I'm gonna suck his skull!!
Tue, 01/31/2012 - 18:26 | 2114510 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Yes Mr Gecko!

Tue, 01/31/2012 - 17:07 | 2114182 prains
prains's picture

How much longer?

 

til the facebook ipo

Tue, 01/31/2012 - 17:11 | 2114204 Zero Govt
Zero Govt's picture

Facebook IPO ?

That'll be a fab top marker

everyone ready to short i hope... 'Bombs Away'

Tue, 01/31/2012 - 17:20 | 2114240 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Facebook reminds me very much of the tech bubble. It's supposed to be worth $100 billion? I don't think so. I consider social media a hype for the sheeple.

Tue, 01/31/2012 - 17:26 | 2114272 HD
HD's picture

What? A glorified message board isn't worth 100 billion?

Tue, 01/31/2012 - 18:35 | 2114533 The trend is yo...
The trend is your friend's picture

It's worth more. Let me explain.  All those teens and recent college grads that are the primary users on a day to day basis tell the whole world when the wkae up with a hangover (advertisers like Bayer will market aspirin and excederin to them), then they tell the world about the massive dump they took or are about to take (Kimberly clark will advertise to them for totiet tissue), later in the day they will tell us how hungry they are (MCD & CMG),  after a mid day nap we get a little reality on hw they need to find a job (monster.com) and finally they give up and go drinking again (Inbev, coors, whoever)....ADVERTISING BABY!  NEVER UNDERESTIMATE THE POWER OF THE SCHWARTZ!

Tue, 01/31/2012 - 17:27 | 2114281 qussl3
qussl3's picture

When the world is one big dumbfuckistan dont underestimate human stupidity.

Tue, 01/31/2012 - 17:33 | 2114302 SheepDog-One
SheepDog-One's picture

But what about FARMVILLE! Imagine the bumper crops we'll get to stave off inflation!

Tue, 01/31/2012 - 17:45 | 2114336 LeBalance
LeBalance's picture

Fade that book.

Tue, 01/31/2012 - 18:14 | 2114470 Ag1761
Ag1761's picture

But it's our only hope for growth, it must be worth $100B.

Tue, 01/31/2012 - 20:27 | 2114866 Taint Boil
Taint Boil's picture

 

 

"If you're not paying for something, you're not the customer; you're the product being sold".

Credit to->blue_beetle

Tue, 01/31/2012 - 17:16 | 2114227 BLOTTO
BLOTTO's picture

They are conditioning the herd sheep this week for the facebook IPO with the story of Zuckerbergs friend who made the $400,000,000 mistake by 'walking away from it.'

Sheep will think: Geeez, i dont want to make that same mistake and will buy up the stock...

 

Tue, 01/31/2012 - 21:31 | 2115077 Clueless Economist
Clueless Economist's picture

is Zuckerman Jewish?

Tue, 01/31/2012 - 17:20 | 2114183 Cult_of_Reason
Cult_of_Reason's picture

The stock is down by only 9% in AH

Bullish!

The stock is "ridiculously cheap" with a negative P/E

Strong Buy on any pullback!

Booyah!

Tue, 01/31/2012 - 20:19 | 2114847 Taint Boil
Taint Boil's picture

 

 

Bought a Kindle and I downloaded one book for $10, then I went to Pirate Bay and downloaded torrent for a lifetime (500 +/-) of books for free (and illegal of course). I will probably never buy a book again – thanks Kindle

 

Right or wrong …..  Well you decide. You would be crazy to pay for anything that you can download off the net. But I also have downloaded movies and never made it to the end because it was so bad and if I would have paid for it I would have been pissed.

 

If you are in the business of selling books, music or movies … good luck.

Tue, 01/31/2012 - 17:09 | 2114191 LongSoupLine
LongSoupLine's picture

 

 

This MUST mean people are more wealthy and now leaving cyberspace to go back to brick and mortar...bullish!!

Tue, 01/31/2012 - 17:11 | 2114203 CvlDobd
CvlDobd's picture

XRT USA! XRT USA! XRT USA!

Wed, 02/01/2012 - 08:21 | 2115823 flattrader
flattrader's picture

I shopped Amazon for a particular type of chromatic tuner.  The prices were all over the place.  Walked my laptop into the local music store which carried what I wanted.  The owner and I negotiated a price which was in the middle of the Amazon listed prices and about $10 bucks lower than what the store was selling it for.  I told him I preferred to buy local.  He was happy I bothered.

Thannks Amazon for getting me a discount.  Add that to your negative EPS.

Tue, 01/31/2012 - 17:09 | 2114194 CvlDobd
CvlDobd's picture

I can't put into words how stupid all this shit is. Who fucking cares? This shit is so fake.

Speechless.

Tue, 01/31/2012 - 17:09 | 2114195 Cdad
Cdad's picture

Say goodbye to the XRT tomorrow.  That should set a nice crap tone...you know, before it is revealed that Average Joe's are getting fired right and left again, and the ISM ISn't.  

Hope all the guys who window dressed today have the skills to move into the curtain business...

Tue, 01/31/2012 - 17:58 | 2114387 Cdad
Cdad's picture

My bad...got confused on crap ETFs...that would be the RTH that has almost 7% of its holdings in AMZN.  As well, the XLY holds a buttload of AMZN, too.

Should be a great day in consumer descretionary bubble land tomorrow.

Tue, 01/31/2012 - 21:11 | 2115012 WonderDawg
WonderDawg's picture

Please let XRT tank tomorrow. I've got March puts that are bleeding and need some help. Hopefully this will bring a needed dose of reality.

Tue, 01/31/2012 - 18:54 | 2114586 Randall Cabot
Tue, 01/31/2012 - 17:14 | 2114202 Dr. Engali
Dr. Engali's picture

 

Wall street analysis:

This news is clearly priced in and we will see accelerated growth in the second half. We recommend buying on any pull back. Bullish full steam ahead.

Tue, 01/31/2012 - 17:24 | 2114259 battle axe
battle axe's picture

Wait a minute, is that an Iceberg ahead? 

Tue, 01/31/2012 - 18:08 | 2114431 TuesdayBen
TuesdayBen's picture

If Zucker is Deutsche for ice.

Tue, 01/31/2012 - 17:12 | 2114207 Robot Traders Mom
Robot Traders Mom's picture

I guess Amerikans have enough disposable income to buy an ipad over a kindle...

 

Makes sense.

Tue, 01/31/2012 - 17:24 | 2114261 LongSoupLine
LongSoupLine's picture

 

 

"Duh!  Of course they're buying iPads...people have to eat afterall." - Dudley

Tue, 01/31/2012 - 17:13 | 2114210 Alex Kintner
Alex Kintner's picture

Well then, better get your 'Go Girl' before Amazon goes belly up.
http://www.amazon.com/Go-Girl-Female-Urination-Lavender/dp/B003BEDUS6

Tue, 01/31/2012 - 17:13 | 2114213 sheeple2012
sheeple2012's picture

never fear, momo tarder and his brethren will have this back to 200 by end of Feb.

Tue, 01/31/2012 - 17:14 | 2114215 SloMoe
SloMoe's picture

Seems to me that Amazon has missed the last, what, six quarters or so?

 

And the pig still goes up...

Tue, 01/31/2012 - 17:25 | 2114265 SloMoe
SloMoe's picture

Hopefully, one of the "analysts" on the earnings call will ask how many of those wonderful Kindle Fires sold boomeranged their way back to Mr. Bozos...

Tue, 01/31/2012 - 17:15 | 2114225 AC_Doctor
AC_Doctor's picture

This company is operating at pencil dick margins.  Downgrades coming in for AMZN tomorrow?

Tue, 01/31/2012 - 17:18 | 2114237 CvlDobd
CvlDobd's picture

Which is bullish as it shows the resilience of American companies to remain profitable through good and bad times. Imagine when bond money comes back into stocks and people are really rich. Margins will get fat again! AMZN to $300!

Tue, 01/31/2012 - 17:27 | 2114280 adr
adr's picture

Profit no longer matters, only revenue. Facebook could make a profit of $.15 but as long as revenue runs in the couple hundred billion range the stock will be close to $500 a share in no time. If the fraudorporation Priceline can be $550 a share, Facebook could be $1500 based on the only fundamental that matters, TOTAL PAPER BULLSHIT.

Tue, 01/31/2012 - 17:17 | 2114230 Panafrican Funk...
Panafrican Funktron Robot's picture

I guess I'm just continuously bothered by the apeshit P/E this thing trades at.  I know we trade in a market where fundamentals don't matter, but come the fuck on.  

Tue, 01/31/2012 - 18:07 | 2114430 Lucius Corneliu...
Lucius Cornelius Sulla's picture

At least AMZN has solid sales and sales growth.  Plus a lot of the free cash flow is invested back into the business.  They are more interested in expanding market share than reporting a bottom line profit, IMHO.

Tue, 01/31/2012 - 18:22 | 2114495 Rainman
Rainman's picture

142 times earnings...what could go wrong ?

Tue, 01/31/2012 - 18:13 | 2114236 Contra_Man
Contra_Man's picture

 

 

  • Worldwide Electronics and Other General Merchandise sales grew 48% to $10.91 billion. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 47%.

By half? Wow! Who else been doin' $10.91 Bills worth of amazing international machine buying? So add another $11B into the faux international and dark f/x, multi-national "Duties Paid" - but little to no corporate taxes paid, eps and share buy-back stock pumping Bankster accounts in the Cayman. 

Another day, another 0.38 cents for the Shareholders this quarter.  Priceless Earnings (P/E) multiple indeed!

 

Tue, 01/31/2012 - 17:18 | 2114239 slaughterer
slaughterer's picture

Watch how they spin this in the CC>  

Tue, 01/31/2012 - 17:22 | 2114249 adr
adr's picture

Who would have thought selling millions of product at a loss would be bad for earnings? Amazon is the Walmart of e-commerce. Trying to put everyone else out of business so they can raise prices later, then profit. Amazon is one of the worst run corporations out there. Ever try to deal with them? You almost want to blow your brains out. Just like navigating their terrible site. $17 billion in revenue and they lose millions!!! Imagine how many jobs could have been saved if that $17 billion was spent at brick and mortar stores.

Tue, 01/31/2012 - 18:12 | 2114455 bdc63
bdc63's picture

I love shopping at Amazon.  I've never had any issues with them.  75% of my Christmas shopping was done through Amazon this year.

What I HATE is the mall.

Tue, 01/31/2012 - 18:57 | 2114592 NotApplicable
NotApplicable's picture

I actually had to call customer support because the web interface failed to let me fix payment info on all parts of an order that was split into three orders (it only let me fix one part). Guess what? I got a native English speaker who not only understood the problem as I described it, they were able to fix it within two minutes.

This happened a week before Christmas, their busiest time, yet I was only on the phone for no more than five minutes. Honestly, it's the best customer service I've had in years. I was shocked.

Tue, 01/31/2012 - 17:23 | 2114251 Dapper Dan
Dapper Dan's picture
Stocks headed for best January in 21st century

Jan 31 3:05pm:

U.S. stocks traded in a narrow range Tuesday, after worse-than-expected U.S. housing and manufacturing data tempered the modest enthusiasm over Europe's progress on a new fiscal pact. More

Sounds so good when the MSM phrases things this way!

Best January in the 21st century!   oh for the love of God!

Tue, 01/31/2012 - 17:26 | 2114273 Irish66
Irish66's picture

Have a cocktail it reads better

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