Amazon eyes rosy revenue

Updated: 2011-04-27 10:02


Twitter Facebook Myspace Yahoo! Linkedin Mixx

Amazon eyes rosy revenue
A box from is pictured on the porch of a house in Golden, Colorado in this July 23, 2008 file photo. gave a confident revenue forecast that suggested its aggressive expansion into new businesses is paying off, soothing concerns about its slimmed-down profit margin, according to news reports on April 26, 2011.[Agencies]

NEW YORK – gave a confident revenue forecast that suggested its aggressive expansion into new businesses is paying off, soothing concerns about its slimmed-down profit margin.

Shares were down 1.2 percent after Amazon reported a 32.8 percent decline in first-quarter profits. But that was a far cry from the big sell-off when the company last reported quarterly results and shares lost 9 percent.

Related readings:
Amazon eyes rosy revenue launches movie studio

"The concern that people had, that they were going to spend more than the Street was expecting, happened," said Ken Sena, analyst at Evercore Partners. "But when you look at the kind of growth acceleration they are showing on the top line and surpassing pretty much all Street expectations, I think that clearly shows what they are doing makes sense."

In recent years, Amazon has fought to win market share through its Prime program of low-cost delivery of its retail goods and by offering inexpensive electronic books for its Kindle e-reader.

More recently, it has invested heavily in areas such as "cloud computing" and "music lockers" where fans store their music on Amazon's servers, to take on its rivals Google Inc and Apple Inc.

Amazon expects that its investing to win market share will work. It forecast current-quarter revenue of $8.85 billion to $9.65 billion, above Wall Street expectations of $8.7 billion, according to Thomson Reuters I/B/E/S.

Chief Financial Officer Tom Szkutak told analysts on a conference call that Amazon has to spend money to develop the technology infrastructure and distribution centers and support its growth. Revenues nearly doubled between 2008 and 2010.

For the company's first quarter, which ended March 31, revenue was $9.857 billion, above the average analyst estimate of $9.57 billion and 38.2 percent above a year earlier.

In contrast, data firm eMarketer estimated that US retail e-commerce sales rose 13 percent in the quarter compared with a year earlier.

Amazon's sales increase was led by a 45 percent rise in North America. Growth elsewhere was 27 percent excluding the effect of currency exchange. Szkutak said that would have been 32 percent if not for Japan's massive earthquake last month.

But net income in the first quarter was $201 million, or 44 cents per share -- down from $299 million, or 66 cents per share, a year earlier. That was far below the 61 cents expected by Wall Street, according to Thomson Reuters I/B/E/S.

The company posted an 18.2 percent dip in operating profit for the quarter, reflecting the costs of competing in the highly promotional retail environment, with beefed-up investment in its cloud computing services.


British Royal Wedding

Prince William and Kate Middleton married at Westminster Abbey in a royal occasion of dazzling pomp and pageantry.
Best wishes

The final frontier

Xinjiang is a mysterious land of extremes that never falls to fascinate.

Bridging the gap

Tsinghua University attracts a cohort of foreign students wanting to come to China.

Costly dream
Models gear up car sales
Urban breathing space