3 Things to Watch When Amazon.com Releases Earnings

Amazon.com (NASDAQ: AMZN  ) reports earnings tomorrow after the market closes. Below are the three keys things that I'll be looking for: 

1. Sales growth better than 20%, or more than $26 billion in revenue
Sales growth is a sign of Amazon.com's continued ability to gain scale and put distance between itself and competitors. We've seen weak holiday results from a number of retailers, particularly brick-and-mortar stores like Best Buy. I'm hoping that Amazon.com will buck the negative retail trend because of its e-commerce strength. This past quarter, eBay sales increased 13% -- I'd expect Amazon.com to grow faster than that.

2. Operating cash flow of more than $5.5 billion or more
Like many other retailers, Amazon.com does a large share of its business during the fourth quarter. And, historically, this is the quarter when Amazon.com generates large amounts of operating cash flow. In the past three years, it has generated $3.5 billion, $4.3 billion, and $5.1 billion in operating cash flow during the fourth quarter. I'm hoping the company will improve and generate at least $5.5 billion in operating cash flow.

3. Millions of new Prime members
Prime membership is a strong indication of customer loyalty at Amazon.com. Although Amazon.com doesn't officially disclose the number of Prime members, I'm hoping they change that policy. Or, at least, I'd like some further guidance on the conference call regarding new Prime members. The company recently issued a press release indicating that it had "tens of millions" of Prime members, and that "more than one million customers around the world became new Prime members in the third week of December." I'd like to hear more about that.

Foolish bottom Line
These are my three biggest things to watch. But I have to be honest... even if Amazon.com misses on those key items, I wouldn't be too disappointed. Amazon.com is an amazing company with a long-term outlook, so I wouldn't overweight the importance of a single quarter. As long as Bezos is at the helm, I'm willing to forgive any quarterly missteps because, like Bezos, I'm focused on the long term.

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