AMAZON: Jeff Bezos and friends have delivered the Amazon.com Inc. first quarter earnings statistics for 2011. The online mega-store and order taker looks to be a very soft figure and one that is confusing when you think what happened in the after-hours session firstly. The official figure being used is $0.44 EPS, a mile short of the Thomson Reuters estimate of $0.61 EPS. Sales rose by 38% to $9.86 billion, but that would have been a 36% gain if it were not for the positive blow of currencies. Thomson Reuters had estimates of $9.52 billion in revenues.
North America sales were $5.47 billion, up 45% from a year ago; international segment sales were up 31% from a year ago to $4.39 billion, but that would be “only” 27% growth if forex changes were not explained for.
Today’s numbers have some grave questions and some serious warnings. It is up to you as to whether or not you trust this or not, but it does look at least possible that all of the draw here is from the Japan crisis rather than just in raw operating terms. We have a hard time trusting this, but the conference call did break out some global data on the Japan situation.
As far assistance, Amazon sees revenues in the coming quarter of $8.85 to $9.65 billion versus Thomson Reuters estimates of $8.85 billion. The company planed that operating income should be down 9% to 65% year-over-year in a range between $95 million and $245 million.
The trouble is this margin figure. The margin as a percent of universal net sales slid down to 3.3% in the latest quarter. This figure is steady turn down: one year ago was 5.5%, then 4.1%, then 3.5%, then 3.7%… now 3.3%. If you break this down, it is the global segment that is a drag on margins. worldwide operating margin was 4.0% of relevant sales and the decline there has been as follows (for a year and each quarter): 7.0%, then 6.9%, then 6.2%, then 5.7%, and now 4.0%.
The biggest issue here for Amazon appears to be its expenditures and operating expenses. A year ago, the first quarter working expenses in North America alone were $3.507 billion but they were $5.175 billion in this last quarter. The global figure was $3.35 billion a year ago and $4.39 billion this quarter. Sales growth of 38% is unbelievable whether it includes acquired companies or not, but if you have to spend about $1.30 per new dollar in revenue while your operating cost is rising and margins are contracting then there is a recipe for adversity.
After digging through the figures, there are some obvious issues affecting Amazon today. It is not obvious that its efforts to drive more and more Kindle sales is adding to its bottom line as it is losing on per unit sales. The worldwide shipping costs were up 52% gross and up 69% net, while its shipping profits were up only 33%. That would appear to be am impact from worldwide shipping costs as well as that “all-you-eat” shipping cost model. The company also has grown its full-time and part-time employee headcount by 45% from a year ago to 37,900 now. That figures were just 33,700 at the end of 2010.
Maybe Jeff Bezos is just spending everything he can spend right now to fend off the competition while still trying to obtain growth. Maybe this is just a build-out story that the company is spending today so it can have big rewards later. If so, then our cause for worry will not matter for another year or two. Eventually, these have to be reasonable out because Amazon.com now has to actually make money each quarter. There are several key explanation here that will have to change if Amazon wants to get it financial reports back in the right direction .
North America sales were $5.47 billion, up 45% from a year ago; international segment sales were up 31% from a year ago to $4.39 billion, but that would be “only” 27% growth if forex changes were not explained for. Today’s numbers have some grave questions and some serious warnings. It is up to you as to whether or not you trust this or not, but it does look at least possible that all of the draw here is from the Japan crisis rather than just in raw operating terms. We have a hard time trusting this, but the conference call did break out some global data on the Japan situation.
As far assistance, Amazon sees revenues in the coming quarter of $8.85 to $9.65 billion versus Thomson Reuters estimates of $8.85 billion. The company planed that operating income should be down 9% to 65% year-over-year in a range between $95 million and $245 million.
The trouble is this margin figure. The margin as a percent of universal net sales slid down to 3.3% in the latest quarter. This figure is steady turn down: one year ago was 5.5%, then 4.1%, then 3.5%, then 3.7%… now 3.3%. If you break this down, it is the global segment that is a drag on margins. worldwide operating margin was 4.0% of relevant sales and the decline there has been as follows (for a year and each quarter): 7.0%, then 6.9%, then 6.2%, then 5.7%, and now 4.0%.
The biggest issue here for Amazon appears to be its expenditures and operating expenses. A year ago, the first quarter working expenses in North America alone were $3.507 billion but they were $5.175 billion in this last quarter. The global figure was $3.35 billion a year ago and $4.39 billion this quarter. Sales growth of 38% is unbelievable whether it includes acquired companies or not, but if you have to spend about $1.30 per new dollar in revenue while your operating cost is rising and margins are contracting then there is a recipe for adversity.
After digging through the figures, there are some obvious issues affecting Amazon today. It is not obvious that its efforts to drive more and more Kindle sales is adding to its bottom line as it is losing on per unit sales. The worldwide shipping costs were up 52% gross and up 69% net, while its shipping profits were up only 33%. That would appear to be am impact from worldwide shipping costs as well as that “all-you-eat” shipping cost model. The company also has grown its full-time and part-time employee headcount by 45% from a year ago to 37,900 now. That figures were just 33,700 at the end of 2010.
Maybe Jeff Bezos is just spending everything he can spend right now to fend off the competition while still trying to obtain growth. Maybe this is just a build-out story that the company is spending today so it can have big rewards later. If so, then our cause for worry will not matter for another year or two. Eventually, these have to be reasonable out because Amazon.com now has to actually make money each quarter. There are several key explanation here that will have to change if Amazon wants to get it financial reports back in the right direction .
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