Amazon.com profit climbs 48 percent but company lowers 2008 revenue outlook; stock hit
Chief Financial Officer Tom Szkutak, speaking on a conference call with analysts, said the company experienced slower growth rates near the end of the third quarter, coinciding with the onset of recent turmoil in global financial markets.
Amazon said it now anticipates full-year revenue of $18.46 billion to $19.46 billion, below the $19.52 billion that analysts polled by Thomson Reuters were expecting. In July, Amazon had predicted 2008 sales of $19.35 billion to $20.10 billion.
Amazon shares fell $6.82, or 13.6 percent, in extended trading, after finishing regular trading down 24 cents at $49.99.
Analysts were widely expecting the company to lower its guidance, but some said they were not expecting it to be lowered so much.
Lazard Capital Markets analyst Colin Sebastian said Amazon is clearly "feeling the impact of the weaker economy," but added that "at the same time, they continue to grow much faster than overall e-commerce, so the platform does remain strong from that point of view."
RBC Capital Markets analyst Stephen Ju still feels Amazon is "the best house on the block." Still, he noted that the company's new revenue guidance range is much wider than usual.
"I think the Amazon management team is generally more conservative than not, so I think they probably did contemplate certainly a bad scenario at the lower end. But that could end up being what it is if the consumer doesn't show up during November," he said.
For the third quarter, Amazon's report offered few surprises to investors. The company earned $118 million, or 27 cents per share -- 2 cents more per share than what analysts polled by Thomson Reuters expected.
In the year-ago quarter, Amazon earned $80 million, or 19 cents per share.
The company said its profit in the most recent period included a $15 million foreign currency benefit.
Revenue rose almost 31 percent to $4.26 billion, just below analysts estimates of $4.27 billion.
Sales of items like books, CDs and DVDs rose 19 percent to $2.49 billion, and sales of electronics and other merchandise jumped 52 percent to $1.64 billion.
Amazon said that sales of book titles for the company's wireless e-reader device, Kindle, account for more than 10 percent of its total book sales. Amazon has not released sales figures for the Kindle device.
Szkutak said the company will not launch a new version of the product until next year at the earliest.
Revenue from shipping -- which includes earnings from Amazon's membership-based two-day shipping program, Amazon Prime, and its third-party shipping program, Fulfillment by Amazon -- climbed 12 percent to $191 million.
The company's net shipping cost also rose, however, to $132 million from $89 million in the year-ago quarter.
Amazon did not say what the increase could be attributed to. It did say that during the quarter it cut the minimum order price for free shipping at its UK site to 5 pounds from 15 pounds.-- Amazon.com Inc. said Wednesday that its profit climbed 48 percent in the third quarter, but the company reduced its full-year sales outlook, showing that the online retailer cannot escape the weak economy. Its shares dived in after-hours trading.
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