Same story for Amazon: Q3 beats, Q4 forecast disappoints

Same story for Amazon: Q3 beats, Q4 forecast disappoints

Summary: Same story - different company, different day. This time it's Amazon on the hot seat.

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Same story - different company, different day. This time it's Amazon on the hot seat.

The company reported third quarter earnings of $118 million, or 27 cents per share, on $4.26 billion in revenue. (statement) Profits were up 48 percent from the same quarter a year ago and revenue rose 31 percent. Wall Street had been expecting 25 cents per share and $4.27 billion in revenue.

So a solid quarter, right? But here comes the guidance for that blasted fourth quarter. The uncertainty around consumer spending for the holidays - a critical time for a company like Amazon - is weighing down everyone from Apple and VMWare to Yahoo and eBay and now Amazon. Only Google, which doesn't issue guidance, saw its shares soar on its Q3 performance. And Apple called in CEO Steve Jobs to help keep Wall Street's concerns to a minimum.

The company revised its guidance for Q4 and FY 2008 - and the stock went tumbling, down as much as 14 percent in after-hours trading. For the quarter, the company said revenues will be between $6 billion and $7 billion. Wall Street had been expecting $7 billion. For the year, Amazon cut its forecast to $18.46 billion to $19.46 billion. Analysts were expecting $19.49 billion.

Highlights from the quarter included:

  • Book titles for Kindle have grown to 185,000. The number of newspaper, magazine and blog offerings have each more than doubled since launch.
  • Amazon Payments launched two new products, Checkout by Amazon and Amazon Simple Pay, enabling merchants to allow their customers to use their Amazon account to complete a transaction.
  • Amazon Web Services (AWS) launched the Amazon Elastic Block Store (Amazon EBS), a new persistent storage feature for the Amazon Elastic Compute Cloud (Amazon EC2).
  • Oracle announced that they will be supporting Oracle Database 11g on Amazon EC2, as well as supporting other services such as Amazon S3.
  • Worldwide Media sales grew 19% to $2.49 billion, compared with $2.09 billion in third quarter 2007.
  • Worldwide Electronics & Other General Merchandise sales grew 52% to $1.64 billion, compared with $1.08 billion in third quarter 2007, and increased to 38% of worldwide net sales compared with 33%.
  • North America segment sales, representing the Companys U.S. and Canadian sites, were $2.30 billion, up 29% from third quarter 2007.
  • International segment sales, representing the Companys U.K., German, Japanese, French and Chinese sites, were $1.96 billion, up 33% from third quarter 2007, and increased to 46% of worldwide net sales compared with 45%. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, International sales grew 28%.

Topics: Amazon, Enterprise Software

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