Amazon.com (AMZN) is the latest large-cap Internet tech leader to miss earnings estimates in its 3rd quarter report after the close of regular trading Tuesday. The e-Commerce titan posted EPS of 14 cents when the Zacks Consensus Estimate expected 24 cents per share. Revenues of $10.9 billion were within the range of the company’s expectations.
As a result, AMZN shares are getting pounded in after-market trading — down as much as 16% at one point minutes after the announcement. This follows a 4.4% drop as of the closing bell.
That said, Amazon.com has been one of the biggest successes of 2011 to this point. The stock was up 26% year-to-date prior to the company’s earnings announcement. For some insight on how traders may be handling Amazon’s earnings report, see Kevin Cook’s piece entitled "Amazon Options for the Big Move."
Clearly, the company has been busy investing in its new Kindle Fire tablet, which is designed to contend for Apple’s (AAPL) iPad market share, though that won’t have happened until the ongoing 4th quarter term at the earliest. In any case, this major sell-off of Amazon after hours looks to be pretty clear overreaction, and savvy investors may want to take a closer look at the stock once the dust settles.
However, analysts had dramatically slashed earnings estimates for the quarter following soft guidance in Amazon’s previous quarter; 90 days ago, the Zacks Consensus Estimate for AMZN’s 3Q was 46 cents — more than three times what the company actually posted! Pretty hard to put a good spin on that.
In any case, the September quarter has been notable thus far for some high-profile earnings disappointments, with Google (GOOG) the only notable exception to the positive side among the major tech players. Elsewhere, 3rd quarter earnings season has been fairly decent.
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