Amazon.com Says Net Quadruples, Raises 2007 Forecast
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Amazon.com Says Net Quadruples, Raises 2007 Forecast
Amazon.com Says Net Quadruples, Raises 2007 Forecast (Update1)
By Heather Burke
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Oct. 23 (Bloomberg) -- Amazon.com Inc., the world's biggest Internet retailer, said quarterly profit quadrupled and raised its forecasts for the year as customers bought the final Harry Potter novel and purchased more electronics and jewelry.
Amazon.com shares fell 8 percent, erasing some of the 10 percent gain before the earnings were released.
Third-quarter net income climbed to $80 million, or 19 cents a share, from $19 million, or 5 cents, a year earlier. Revenue increased 41 percent to $3.26 billion, Seattle-based Amazon.com said today in a statement.
Sales of electronics and general merchandise gained 54 percent, more than those of CDs and DVDs, as Amazon.com expanded its jewelry and grocery offerings. The retailer also increased more profitable sales by third parties overseas and reduced technology spending growth.
``The strong revenue growth and margin improvement story is continuing,'' said Jeffrey Lindsay, an analyst at Sanford C. Bernstein & Co. in New York. ``Their strategy of expanding into new product areas and geographic areas is working very well.''
Amazon.com raised its full-year sales forecast to as much as $14.6 billion, a 36 percent gain from 2006, from an earlier estimate of at most $14.3 billion. Operating income may climb to as much as $675 million, from a previous forecast of at most $640 million, the retailer said.
Amazon.com fell $8.07 to $92.75 at 5:04 p.m. in extended U.S. trading after results were released. Earlier, they surged $9.53 to $100.82, the highest price in almost eight years, in composite trading on the Nasdaq Stock Market.
Stock Drop
``It's not unusual with a run-up of this size for people to take profit,'' said Lindsay. He rates Amazon.com shares ``outperform'' and doesn't own any of the stock.
Sixteen analysts surveyed by Bloomberg predicted average profit of 18 cents a share. Seventeen projected sales of $3.14 billion.
Technology and content spending slowed to 6.4 percent of sales, less than the 7.3 percent ratio Lindsay estimated.
``They have a timeless and cutting-edge variety that protects them against some of the ups and downs of retail,'' Scott Tilghman, an analyst at Soleil Securities Corp. in Baltimore, said today before the release of results. ``The opportunity to roll out those categories internationally is significant.'' He rates the shares ``buy'' and doesn't own any.
Slower Spending
Chief Financial Officer Thomas Szkutak said in March that the company would slow spending on technology after Amazon.com's profit margin fell to the lowest level since 1999.
The retailer sold 2.5 million copies of ``Harry Potter and the Deathly Hallows'' worldwide, its largest new product release.
Amazon.com has sought to diversify its product offerings as Barnes & Noble Inc. and other bookstores have cut prices and promoted customer loyalty programs.
The online retailer has marketed international third-party sales, through which customers and merchants sell goods through Amazon.com, and enhanced a Web services program to lure developers who want to use its technology.
Amazon.com sells products in more than three dozen categories ranging from power tools to musical instruments.
To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net .
Last Updated: October 23, 2007 17:13 EDT
By Heather Burke
Enlarge Image/Details
Oct. 23 (Bloomberg) -- Amazon.com Inc., the world's biggest Internet retailer, said quarterly profit quadrupled and raised its forecasts for the year as customers bought the final Harry Potter novel and purchased more electronics and jewelry.
Amazon.com shares fell 8 percent, erasing some of the 10 percent gain before the earnings were released.
Third-quarter net income climbed to $80 million, or 19 cents a share, from $19 million, or 5 cents, a year earlier. Revenue increased 41 percent to $3.26 billion, Seattle-based Amazon.com said today in a statement.
Sales of electronics and general merchandise gained 54 percent, more than those of CDs and DVDs, as Amazon.com expanded its jewelry and grocery offerings. The retailer also increased more profitable sales by third parties overseas and reduced technology spending growth.
``The strong revenue growth and margin improvement story is continuing,'' said Jeffrey Lindsay, an analyst at Sanford C. Bernstein & Co. in New York. ``Their strategy of expanding into new product areas and geographic areas is working very well.''
Amazon.com raised its full-year sales forecast to as much as $14.6 billion, a 36 percent gain from 2006, from an earlier estimate of at most $14.3 billion. Operating income may climb to as much as $675 million, from a previous forecast of at most $640 million, the retailer said.
Amazon.com fell $8.07 to $92.75 at 5:04 p.m. in extended U.S. trading after results were released. Earlier, they surged $9.53 to $100.82, the highest price in almost eight years, in composite trading on the Nasdaq Stock Market.
Stock Drop
``It's not unusual with a run-up of this size for people to take profit,'' said Lindsay. He rates Amazon.com shares ``outperform'' and doesn't own any of the stock.
Sixteen analysts surveyed by Bloomberg predicted average profit of 18 cents a share. Seventeen projected sales of $3.14 billion.
Technology and content spending slowed to 6.4 percent of sales, less than the 7.3 percent ratio Lindsay estimated.
``They have a timeless and cutting-edge variety that protects them against some of the ups and downs of retail,'' Scott Tilghman, an analyst at Soleil Securities Corp. in Baltimore, said today before the release of results. ``The opportunity to roll out those categories internationally is significant.'' He rates the shares ``buy'' and doesn't own any.
Slower Spending
Chief Financial Officer Thomas Szkutak said in March that the company would slow spending on technology after Amazon.com's profit margin fell to the lowest level since 1999.
The retailer sold 2.5 million copies of ``Harry Potter and the Deathly Hallows'' worldwide, its largest new product release.
Amazon.com has sought to diversify its product offerings as Barnes & Noble Inc. and other bookstores have cut prices and promoted customer loyalty programs.
The online retailer has marketed international third-party sales, through which customers and merchants sell goods through Amazon.com, and enhanced a Web services program to lure developers who want to use its technology.
Amazon.com sells products in more than three dozen categories ranging from power tools to musical instruments.
To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net .
Last Updated: October 23, 2007 17:13 EDT
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