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Where Are the Amazon Bears Now?

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If you want to read up on's (Nasdaq: AMZN  ) stellar fourth-quarter report, I'm afraid that you're four days too late.

I had the report covered on Monday in my "Amazon in 2012" article, where I took a hypothetical peek at the e-tailer's future. If you'll pardon the lazy copy, paste, and italicize approach, this is what I wrote on Monday:

Despite my best intentions, you're still worried about Amazon's fourth-quarter report. OK, let's get this out of the way, then. It was a good report. Heck, it was a great report.

Amazon flourished, and not just because it was already riding a hot streak, having topped Wall Street expectations in each of the first three quarters of 2008 -- or eight of the past nine periods -- leading up to the 2008 holiday season.

Amazon topped analyst expectations for $0.39 a share on Thursday. The pros blew it, assuming that the company -- like so many other retailers -- would be slammed on freefalling margins. Investors failed to realize that Amazon can still dictate its own markups, assisted by the steady trickle of third-party income from its booming marketplace. I am not denying that Amazon faces pricing pressures. It does. However, it is also there to take advantage of distressed merchandise makers, too.

In the end, Amazon on Thursday clocked in at the high end of its initial guidance, which called for between $145 million and $305 million in operating profits on 6% to 23% in net sales growth.

Not bad, huh? Maybe I should ditch Aristotle as a middle name and go with Nostradamus.

Net sales rose 18% to $6.7 billion, and would have soared 24% if it wasn't for unfavorable foreign exchange rate translations. Operating income of $272 million was essentially flat with last year's showing, but would have clocked in 10% higher at $299 million after adjusting for currency fluctuations. On the bottom line, net income inched 9% higher to $0.52 a share.

Sure, sales growth decelerated from its headier pace in recent quarters, but good luck finding retailers who are keeping up.

Amazon isn't just an online retailer these days, of course. It's taken on Sony (NYSE: SNE  ) in e-book readers, Akamai (Nasdaq: AKAM  ) in content-delivery networks, and Apple (Nasdaq: AAPL  ) in digital music delivery.

However, it's still driven by the success of its flagship e-tailing model and its ability to supplant a fading eBay (Nasdaq: EBAY  ) as a marketplace for third-party sellers. That's not going to change. Amazon sees 9% to 19% sales growth for the current quarter at a time when consumers are supposedly spending less than they did a year ago.

Go ahead and start doubting Amazon now. I'll deliver the scoop three months early this time: Amazon will win again, the way it has in nine of the past ten quarters.

Other headlines, if you still want to live in the past:

eBay is a Motley Fool Inside Value pick. Akamai Technologies is a Motley Fool Rule Breakers recommendation. eBay,, and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has been shopping online for about as long as has been in business. He does not own shares in any of the stocks in this article. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (4)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 30, 2009, at 12:37 PM, SteveTheInvestor wrote:

    Nice guess. I wouldn't get overly confident. With a P/E like AMZN has, a little slip-up will bring it down just like most everything else.

  • Report this Comment On January 30, 2009, at 1:55 PM, Goodlaw7 wrote:

    Classic bubble-like valuation on this stock. The business may be solid and great, but its earnings come now where near close to justifying the valuation. Decent business, classically way over-priced stock dependent on momentum investors who tend to run at the first hiccup.

  • Report this Comment On January 30, 2009, at 3:05 PM, dealmastergee wrote:

    eBay's GMV is the equivalent to Amazon's Revenue figure. eBay's GMV # is still very far ahead of Amazon Revenue # because they grew at a much faster pace, crushing Amazon out of the gate.

    Amazon is now catching up which is surprising, but they still trail eBay significantly in both GMV/Revenue and Profit, and also Web Visitors.

    I think this battle is long from over, eBay won the first battle, Amazon looks to be winning this one. But to say this War is over that's just narrow sited.

    I've been buying more on eBay lately, because I've been able to find better deals. I'm surprised by this move Amazon has had, but I'm not convinced they are the clear winner, not by a longshot.

  • Report this Comment On January 30, 2009, at 4:21 PM, foolishgoth wrote:

    I would love a little slip up right now. A good solid company, excellent. Too much good press to buy though. Ill add them to my watch list, and hope they get some negative press that is unrelated to the fundementals of the company.

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