Is Something Wrong With Amazon.com?http://www.fool.com/investing/general/2011/10/26/is-something-wrong-with-amazoncom.aspx Evan Niu (TMFNewCow)
October 26, 2011
There's been a theme going around lately when it comes to Amazon.com's (Nasdaq: AMZN ) quarterly earnings releases, and it's that right now the bottom line is taking a back seat to top-line revenue gains and investing in future growth.
Despite this recurring notion, investors are still dumping the stock today from the knee-jerk reaction that net income plunged far more than what analysts were expecting, with the stock down almost 13% at the end of the trading day.
The cold, hard numbers
Going forward, Amazon even projected the possibility of an operating loss next quarter, with a pretty wide range of what to expect because of difficulty in predicting seasonality. The company may generate an operating loss of $200 million, or income of $250 million. Meanwhile, revenue is forecasted to keep chugging higher to an altitude of $16.5 billion to $18.7 billion, representing between 27% and 44% year-over-year growth.
Hey, big spender
Amazon has been aggressively growing its video-streaming offering -- which now boasts more than 12,000 movies and TV shows -- for Prime members, keeping Netflix (Nasdaq: NFLX ) on its red toes, while the Kindle Fire is estimated to cost Amazon more than its $199 retail price tag, in contrast to the healthy margins Apple (Nasdaq: AAPL ) enjoys on the iPad.
Key phrase: millions more. Research In Motion (Nasdaq: RIMM ) hasn't even shipped a single million PlayBooks in more than two quarters, and Amazon is upping production by the millions before the Kindle Fire has even reached its first consumer. While each one of those Kindle Fires will undoubtedly generate additional upfront losses, each unit also represents the fact that Amazon is on track to