Iffy Forecast Overshadows Positive Earnings For Amazon

    October 21, 2010

This afternoon, Amazon delivered its third quarter earnings report, and just about everything pertaining to the period ending September 30th was positive.  Unfortunately for Amazon, shareholders are sending the stock lower in after-hours trading due to lower margins and concern about the fourth quarter.

We’ll start with the good news, at least.  Amazon reported $7.56 billion in revenue versus estimates of $7.35 billion.  Earnings per share hit $0.51, too, rather than $0.48.

Here’s the problem: operating margins decreased from 4.6 percent to 3.5 percent on both a quarter-over-quarter and year-over-year basis, which is sort of a big drop.

Also, Amazon stated with respect to the fourth quarter, "Operating income is expected to be between $360 million and $560 million, or between 24% decline and 18% growth compared with fourth quarter 2009."

So Amazon’s stock is now down 4.10 percent despite the company’s past achievements.

Still, Amazon founder and CEO Jeff Bezos assured everyone that his business will do its best to attract customers, saying, "This holiday season we’ll have the best prices, the biggest selection, the highest in-stock, and the fastest delivery in our history."