Today after the closing bell, Amazon.com (AMZN) posted mixed results for its fiscal 1st quarter 2011. Quarterly revenues of $9.86 billion beat the Zacks Consensus Estimate of $9.5 billion, but EPS missed badly — 44 cents per share as opposed to the 60 cents per share in the Zacks Consensus.
This marks the first negative earnings surprise for Amazon.com since the 2nd quarter of 2010. But today’s number was a doozy — a 36.36% negative surprise takes the four-quarter average to -11.59%. Further, analysts had drastically revised earnings estimates downward at the beginning of the quarter. Thus, AMZN stock — which was already trading down in Tuesday’s regular session by 1.68% to $182.30 — took an initial hit in the after-market.
Increased spending on infrastructure and into growing markets has apparently taken a much bigger bite out of Amazon.com’s bottom line in the quarter, but the beat on revenues looks to be a genuine silver lining. $9.86 billion not only easily topped the Zacks Consensus, but is 38% higher than the $7.13 billion posted in the year-ago quarter. And in a growth industry, figures like this can make up for a lot of perceived disappointment elsewhere.
This was not expected to be a strong quarter for Amazon. Costs were expected to hit profits harder (though clearly not by this much), Amazon has exposure to Japan’s issues, among other things, but the growth in the company’s top line is the positive takeaway from this mixed report. This may explain why AMZN shares are not bearing the brunt of a drastic sell-off in late trading today.
Guidance for the 2nd quarter is roughly in-line with the Zacks Consensus at this time. Amazon.com expects earnings of 57 cents a share on revenues of $8.74 billion. Amazon currently has a Zacks #3 Rank (Hold), which corresponds with a longer-term Neutral recommendation.
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