Amazon, eBay, and Amgen Previews

Quarterly reports provide a useful snapshot of a company's recent performance. The results are important, but in the same breath a long-term investor usually shouldn't put too much weight on a single quarterly report alone.

That noted, this week we'll see results from eBay (Nasdaq: EBAY), Amgen (Nasdaq: AMGN), Amazon.com (Nasdaq: AMZN) and Starbucks (Nasdaq: SBUX). eBay reports on Tuesday afternoon, Amgen and Amazon report on Wednesday, and Starbucks reports Thursday. Today, we preview the results from eBay, Amgen and Amazon so that investors know what to expect and look at.

eBay's Second Quarter
Tomorrow eBay is expected to report earnings per share of $0.03. Although this is the number that most investors and the media will focus upon, it isn't very important. Most if not all of eBay's earnings per share are derived from interest income, not operations, so they are not indicative of eBay's business strength. Other numbers are much more important.

eBay should report revenue of about $94 million (excluding Half.com), up from $85.7 million in the first quarter. Its gross profit margin should rise modestly from last quarter's 72.8%, and registered users should rise (we hope) by at least 1.7 million to 14.3 million total. eBay gained 2.6 million new registrants in the busy first quarter.

All of the following metrics will ideally improve from the first quarter: 1) Auctions listed during the second quarter should exceed last quarter's 53.6 million; 2) gross merchandise sales of $1.15 billion last quarter should be topped; 3) the average sale price per auction should be above $21.50 (this number has declined in the past, which we don't like); 4) online auctions listed per user should at least match last quarter's 4.25; 5) eBay's revenue as a percentage of total gross merchandise sales should be at least 6.72%.

We'll study all of these numbers in our Motley Fool Research report on eBay issued soon after the results. We'll likely discuss these numbers here in a timely fashion, too. I'm not writing this column again until Thursday, though, so I can't say for certain. eBay's conference call can be heard tomorrow afternoon.

Amazon's Second Quarter
As with eBay, Amazon's results (issued Wednesday) are actually more newsworthy and carry more weight than your typical established company's quarterly report. Investors are eager to see how Amazon and eBay improve financially and by many other metrics, too, so the results are studied closely and the stocks are likely to react quickly.

Amazon's revenue should be level with or slightly above the first quarter's $573.9 million; its gross margin should rise modestly from the 22.3% achieved last quarter; and we're hoping that the number of registered customers grows from 20 million to over 22.4 million. On average, Amazon is expected to lose $0.35 per share, which is the same amount lost in the first quarter when the company lost $197 million from operations and over $300 million total.

The potential for a positive surprise comes from the fact that the first quarter is the most difficult on cash flow, so we may see improvement in the second quarter rather than mere flat operating performance, which is expected.

For the year, Amazon should be moving toward operating losses that drop from 17.3% as a percentage of sales in Q1 to single digits; fulfillment costs, meaning distribution and shipping, should fall to the low teens as a percentage of sales from 17% of sales last quarter; and Amazon's cash burn should decrease until the company is cash flow positive by the end of 2000. Wednesday, we'll get a look at the potential progress. You can also hear Amazon's conference call that afternoon.

Amgen's Second Quarter
Amgen's best-selling drug, Epogen, should see percentage sales growth in the low double-digits year-over-year when Amgen announces results on Wednesday. Epogen's first-quarter sales rose 12% to $440 million. This quarter, Epogen sales should be approximately $470 million, up more than 11% from last year's $428 million.

Neupogen sales declined 13% last quarter to $250 million, but this drug's sales should rise in the mid-single digits (percentage-wise) for all of 2000. Therefore, ideally Neupogen's sales will rebound to rise at least 5% this quarter to $319 million, up from $304 million in the same quarter last year.

Amgen's earnings per share should be at least $0.27, up 8% from Q2 in 1999, and its gross margin should be at least 89%. Amgen's stock has made new highs the past two days, partly the result of a favorable litigation ruling.

We'll be here the next three days covering company news as it unfolds, and covering it in a way that you can understand. Fool on!

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