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S&P 500 (NYSE:SPY) component Amazon.com Inc. (NASDAQ:AMZN) reported a drop to a loss in the third quarter driven by higher costs. Amazon.com sells millions of products across dozens of product categories on its web site. It also manufactures and sells the Kindle, an e-reader.
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Amazon.com Inc. Earnings Cheat Sheet
Results: Reported a loss of $274 million (60 cents per diluted share) in the quarter. Amazon.com Inc. had a net income of $63 million or 14 cents per share in the year-earlier quarter.
Revenue: Rose 26.9% to $13.81 billion from the year-earlier quarter.
Actual vs. Wall St. Expectations: Amazon.com Inc. fell short of the mean analyst estimate of a loss of 8 cents per share. It beat the average revenue estimate of $12.89 billion.
Quoting Management: “Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point,” said Jeff Bezos, founder and CEO of Amazon.com. “And our approach is working – the $199 Kindle Fire HD is the #1 bestselling product across Amazon worldwide. Incredibly, this is true even as measured by unit sales. The next two bestselling products worldwide are our Kindle Paperwhite and our $69 Kindle. We’re selling more of each of these devices than the #4 bestselling product, book three of the Fifty Shades of Grey series. And we haven’t even started shipping our best tablet – the $299 Kindle Fire HD 8.9 ships November 20.”
The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 33.7%, with the biggest boost coming in the third quarter of the last fiscal year when revenue rose 43.9% from the year earlier quarter.
The company’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $7 million in the second quarter, a profit of $130 million in the first quarter and $177 million in the fourth of the last fiscal year.
The company has fallen short of estimates for two consecutive quarters. In the second quarter, it missed expectations by one cent with net income of one cent versus a mean estimate of net income of 2 cents per share.
Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 68 cents a share to 50 cents over the last ninety days. For the fiscal year, the average estimate has moved down from $1.17 a share to 70 cents over the last ninety days.
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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)
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