Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Amazon's Earnings Report a Good Read


But why aren't insiders buying?

On Wednesday after the close, online retailer (AMZN) released its second-quarter numbers. They were in a word, solid. In the period ended June 30th, the Seattle-based company earned $158 million or $0.37 a share - nearly double the $78 million or $0.19 a share it earned in the comparable period last year, and a hefty $0.11 north of analysts' expectations.

Excluding a large asset sale (its European DVD rental business), however, Amazon actually beat the number by only $0.02. But the overall picture is still strong.

The firm generated about $4.06 billion in revenue, almost 41% more than it did in the same period last year. The number was also markedly larger than $3.96 billion the Street had been expecting. Strong North American and international sales played a role.

At the same time, a number of product areas, including books and electronics, showed encouraging levels of growth - which may seem surprising, given how badly many other retailers are struggling. This could indicate a behavior shift: Strapped consumers may be heading online to make discretionary purchases, thereby saving themselves the cost of the gas required to drive to the mall.
While Amazon itself is spending more on shipping costs, its gross margin totaled 23.8%; its operating margin came in at 5.3%. That's a respectable number, particularly given the operating environment and the fact that its gross and operating margins for 2007's second quarter were 24.3% and 4%, respectively.

This suggests 2 things to me: Management has been keeping a close eye on costs, and that the company is making up in volume for what it lost when it lowered prices on its wares. Both are important.
Another interesting point: The company said it expects third-quarter sales to come in between $4.2 and $4.425 billion. That's good news, because it's in line with the $4.23 billion that the Street is expecting. Moreover, Amazon expects full-year net sales of between $19.35 and $20.1 billion for 2008. Analysts had been looking for $19.6 billion.
I have two thoughts on this. First, that this could cause some sell-siders to up their full-year numbers; second, that management's willingness to increase guidance is a strong sign of confidence.
But there is one cause for concern, and it isn't small: Though the shares have been trading toward the lower end of their 52-week range, insiders haven't been spending a lot of their money on the stock. In fact, a quick look at the insider data shows no open market purchases have been made over the last six months.

Which begs the question: If Amazon's prospects are so strong, why aren't insiders bellying up to the bar?
Amazon closed at $70.54, up $2.57 or 3.78%. The shares were up more than $6 in after-hours action.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos