Amazon Lets It Be

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When the Amazon.com (Nasdaq: AMZN) conference call wrapped up last night, an instrumental version of The Beatles' "Let It Be" kicked in. Companies don't have much of a say in the elevator music that leads in and out of their calls, but the random pick was fitting, given the after-hours price swings leading into the call.

When I find myself in times of trouble
Mother Mary comes to me
Speaking words of wisdom, let it be

Shares of Amazon initially shot up higher on the report, and so the market had reasons to cheer after being let down in recent days by other dot-com bellwethers, including eBay (Nasdaq: EBAY), Yahoo! (Nasdaq: YHOO), and Google (Nasdaq: GOOG). Net sales at Amazon soared 41% to $4.06 billion. Net income more than doubled to $158 million, or $0.37 a share. Silly analysts -- they were looking for a profit of only $0.26 a share on $3.96 billion in net sales. The results were a welcome acceleration from this year's healthy first-quarter gains.

Besides, Amazon's seller gateway is growing as it attracts disgruntled eBay power sellers, and physical merchandise is proving to be an easier to sell than online advertising is, as Yahoo! and Google are finding out as they deal with maxed-out sponsors. So shouldn't Amazon be the only dot-com bellwether that matters today?

And in my hour of darkness
She is standing right in front of me
Speaking words of wisdom, let it be

Aftermarket gains turned into losses when Mr. Market began to digest the rest of the report. Both the top and bottom lines had been inflated by foreign currency gains. Absent the weak dollar, net sales would have risen by just 35%, just shy of analyst guesstimates. Profitability was further padded by a $53 million gain when Amazon sold its European DVD-rental business. The company would have still finished ahead of Wall Street's targets, but taking these things into consideration showed that Amazon didn't enjoy the blowout quarter that the market had initially assumed in its knee-jerk euphoria. Silly analysts weren't so silly after all.

Let it be, let it be
Let it be, let it be
Whisper words of wisdom, let it be

Beyond the numbers
However, even with the foreign-currency benefits and the payday behind its overseas retreat from aping Netflix (Nasdaq: NFLX) and Blockbuster's (NYSE: BBI) Total Access, Amazon still had a solid report. Cynics who figured that Amazon would take a hit given the weak economy were simply wrong.

Consumers may have fretted the drive over to the suburban mall, but mouse-click mileage is always cheap. The allure of attractive prices and subsidized shipping is irresistible in these penny-pinching times.

Then again, who says Amazon is stapled to this country's fortunes alone? Some 47% of the company's net sales were international. The company continues to become a more global retailing powerhouse.

Now, on another front, Amazon is still tight-lipped about how the Audible integration is coming along and how many Kindles it has sold. But that doesn't preclude us from judging Amazon's overall performance.

The consumer-electronics category was the Amazonian speedster, but even the company's flagship business of selling books, CDs, and DVDs rose by a healthy 25% both domestically and overseas, adjusted for foreign exchange translations.

Back to the future
Amazon's outlook is also healthy. It's looking for net sales to climb by 30% to 35% and the possibly top the $20 billion mark. When Amazon was wobbly-kneed heading into the dot-com bubble's burst, did anyone think the company would eventually ring up $20 billion a year in sales? 

Sure, the company isn't going to grow at the 39% clip it delivered last year. The guidance also calls for sales growth to decelerate during the second half of the year, given the 39% growth spurt it scored during the first six months of 2008. Yet shareholders shouldn't mind. After seeing Overstock.com (Nasdaq: OSTK) post a quarterly loss last week on slower growth than Amazon posted -- despite Overstock's natural appeal with deal-sniffing shoppers -- Amazon is clearly the class of both conventional and discount e-tail.

And sure, margins could be better. The company could also be more candid about how its digital-delivery initiatives are coming along. But still, when you get down to it, Amazon has become the perfect trend-agnostic play on the growing popularity of online shopping. Perhaps that's why, after all of the initial ups and downs, the stock began trending higher, long after the call ended and the symphonic spin on The Beatles began to fade away.

And when the broken-hearted people
Living in the world agree,
There will be an answer, let it be.

Other headlines that don't miss a beat or a Beatle:

• Amazon's Loss Is Netflix's Gain
• Amazon.com Is Faster Than You
• Act Fast and Kiss Your Returns Goodbye