ALEXANDRIA, VA (July 22, 1998) -- Being pelted with news left and right, the market dodged right and then left, but it couldn't decide which direction to actually run. A riot of volatility ensued. Between Alan Greenspan's remarks, earnings announcements, and lower international markets (see the Fool U.K), U.S. stocks ended a nine-day winning streak yesterday and added to the loss today. The S&P closed fractionally lower, though the Fool Port managed to gain ground on strength in Amazon.com and America Online. The former announced quarterly results after ye old market closed.
In the last three months, Amazon.com (Nasdaq: AMZN) achieved sales of $116 million, or an average of $1.28 million per day. This compares to $87 million in sales last quarter, and is four-fold higher than last year's sales of $28 million. The second quarter began on April Fool's Day and ended on June 30. Amazon's music store opened on June 11, so a majority of sales were books.
Gross margins at the company were 22.6%, above the 19% achieved last year. Amazon's operating loss decreased to 10% of sales, at $11.6 million, from 25% of sales one year ago (yes, economies of scale has made friends with our company -- hopefully the friendship will flourish). For the quarter, Amazon lost $15.8 million, or $0.33 per share on a pro forma basis, compared to an anticipated loss of $0.45 per share. Using regular GAAP accounting, Amazon lost $0.44 per share. This number includes, among other intangibles, the recent goodwill costs paid in acquiring the leading U.K. and German online booksellers and the Internet Movie Database Ltd. The pro forma loss is a better comparison of apples to apples in a business sense, but the GAAP loss is proper.
Customer accounts grew more than 35%, topping 3.1 million, and repeat customers accounted for 63% of all orders -- up from recent results. Customer loyalty is strong. For the past six months, sales topped $200 million with gross margins of 22.4% and expenses generally falling in-line (shrinking in proportion) as sales grow.
Yet, what this strong looking report means for the stock price in the near term is anyone's guess, and not being able to listen to the conference call (which is usually what moves a stock) makes the situation even more random. In the next quarter, we hope that Amazon will provide a conference call replay for all investors -- and we might ask Fool readers and radio show listeners to fight with us for that very thing.
There's always more to write about this controversial company, but today Amazon needs to share the earnings spotlight with Lucent and DuPont. Scratch that -- with Lucent. When DuPont stepped on the stage to report its results, the spotlight was quickly turned off, leaving the company in the darkness of a quickly emptying theatre.
Earlier in the show, the applause was stolen by Lucent Technologies (NYSE: LU). Lucent saw second quarter sales rise an impressive 14% from last year, to $7.2 billion. Excluding charges, the company's net income more than doubled to $435 million, or $0.32 per share, easily topping the $0.27 per share estimate. The stock climbed from $80 over the past two weeks to top $100, so apparently this good news was expected. Today the stock retreated, looking to cool off some in the shade.
With a market value of $131 billion, Lucent has done little but grow hotter (Web chart) since being spun-off from an oppressive Ma Bell. In fact, the market value of AT&T is only $93 billion, now paling in comparison to Lucent. This Cinderella story personifies the ideal of unlocking value by breaking up a business -- though not all breakups are so successful, of course. A jilted NCR has only sputtered since AT&T ditched it, as do many jettisoned companies.
Anyway, Old Lou ain't exactly a cheap date anymore. Its success since divorcing AT&T has gone to Lucent's waistline, putting the stock at a formidable 51 times 1999 earnings estimates of $1.95 per share. Of course, estimates might need to be raised now. The company's success at cost management and conquering new markets helped gross margins to improve to 45% from 41% last year, and all systems are "Go" for the future. To read about Lucent in-depth, the conference call summary from last quarter is here at the Fool, and we'll offer this quarter's call summary tomorrow. The current call replay number is 1-800-475-6701, and the access code is 394564.
Speaking of conference calls, the summary (if you can call 2,100 words a summary) of Innovex's (Nasdaq: INVX) call is now available. Click here to read about the company's latest quarter and, more importantly, its hopes for the future.
Though having existed since 1802 (first selling gunpowder), DuPont (NYSE: DD) is, like Innovex, banking on the future for better results. The largest chemical company in the country, the Foolish Four giant reported second quarter net income of $1 billion, down 12% from last year. The selling environment was tough all over, from oil prices, to crop protection, to Asia and the General Motors strike. The company also expects the third quarter to be difficult.
Yes, DuPont is taking punches left and right, but it still earned $11 million in profit per day in each of the past 90 days, or $458,000 per hour. Better pay than your average summer job. It's all relative, though, and for this company this was below expectations, so the stock declined. No matter. We're methodically married to DuPont until at least August of 1999 (eighteen months from February of this year, when we bought), and we anticipate that business will eventually strengthen.
Next in the news, The Wall Street Journal reported that Trump -- not Trump Hotels (NYSE: DJT) -- might be looking to get into the Internet business. This news came soon after Trump Hotels was denied the right to expand one of its Atlantic City casinos. The Journal reports that Donald will announce "Trump New Media, offering New Yorkers high-speed Net access and video on demand." Mr. Trump admits that he doesn't know anything about the business, but shares that he's "interested in supplying the people in [his] buildings with great products."
Not one to begrudge an entrepreneurial spirit, I certainly hope that the Don can pull it off. Maybe we can even provide all of the Trump residents with free FoolMart products to launch the new Internet service in their buildings.
Before heading off for an iced coffee, or some coffee ice cream in root beer (it's good), remember that we'll see results from Starbucks (Nasdaq: SBUX) tomorrow night. For the first time, thanks to Fools like you, Starbucks will make the conference call available to the general public. The Fool will have a summary posted by the next day.
And finally and double finally, several Fools wrote asking about The Gold Bug Variations novel mentioned in last night's Fool column. The best summary that I could possibly provide already exists at Amazon.com. Check it out here. And by the way, tonight on the Amazon mainpage the top center reads "First-Time Buyers: Click here to buy your first book for 1 cent (no strings attached)." Hmmmm.
There ya go. New buyers, blaze a trail to amazon.com right now and pick up a bargain while it lasts.
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Day Month Year History Annualized FOOL +0.22% 15.30% 64.53% 452.18% 53.93% S&P: -0.08% 2.67% 19.96% 153.94% 26.52% NASDAQ: -0.47% 3.96% 25.43% 173.51% 28.91% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 130.56 3490.40% 9/9/97 580 Amazon.com 19.11 133.94 600.85% 5/17/95 1960 Iomega Cor 1.28 5.81 353.96% 10/1/96 84 LucentTech 23.81 100.38 321.60% 8/12/96 130 AT&T 39.58 57.63 45.60% 2/20/98 200 Exxon 64.09 71.81 12.05% 4/30/97 -1170*Trump* 8.47 7.69 9.23% 2/20/98 215 DuPont 59.83 63.44 6.02% 7/2/98 235 Starbucks 55.91 55.56 -0.62% 2/20/98 270 Int'l Pape 47.69 45.38 -4.86% 1/8/98 425 3Dfx 25.67 15.94 -37.91% 8/24/95 130 KLA-Tencor 44.71 26.88 -39.89% 8/13/96 250 3Com Corp. 46.86 28.06 -40.12% 6/26/97 325 Innovex 27.71 15.13 -45.42% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 92699.38 $90117.51 9/9/97 580 Amazon.com 11084.24 77683.75 $66599.51 5/17/95 1960 Iomega Cor 2509.60 11392.50 $8882.90 10/1/96 84 LucentTech 1999.88 8431.50 $6431.62 8/12/96 130 AT&T 5145.11 7491.25 $2346.14 2/20/98 200 Exxon 12818.00 14362.50 $1544.50 4/30/97 -1170*Trump* -9908.50 -8994.38 $914.13 2/20/98 215 DuPont 12864.25 13639.06 $774.81 7/2/98 235 Starbucks 13138.63 13057.19 -$81.44 2/20/98 270 Int'l Pape 12876.75 12251.25 -$625.50 8/24/95 130 KLA-Tencor 5812.49 3493.75 -$2318.74 6/26/97 325 Innovex 9005.62 4915.63 -$4090.00 1/8/98 425 3Dfx 10908.63 6773.44 -$4135.19 8/13/96 250 3Com Corp. 11715.99 7015.63 -$4700.37 CASH $11876.47 TOTAL $276088.90