Amazon.com, Inc. Earnings Cheat Sheet: Margins Suffer as Costs Rise, Profit Falls

Rising costs hurt S&P 500 (NYSE:SPY) component Amazon.com, Inc. (NASDAQ:AMZN) in the second quarter as profit dropped from a year earlier. Amazon.com, Inc. sells millions of products across dozens of product categories on its web site. It also manufactures and sells the Kindle, an e-reader.

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Amazon.com Earnings Cheat Sheet for the Second Quarter

Results: Net income fell to $191 million (41 cents per share) vs. $207 million (45 cents per share) a year earlier. This is a decline of 7.7% from the year earlier quarter.

Revenue: Rose 51% to $9.91 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: AMZN beat the mean analyst estimate of 37 cents per share. It beat the average revenue estimate of $9.37 billion.

Quoting Management: “Low prices, expanding selection, fast delivery and innovation are driving the fastest growth we’ve seen in over a decade,” said Jeff Bezos, founder and CEO of Amazon.com. “Kindle 3G with Special Offers has quickly become our bestselling Kindle at only $139. Customers love the convenience of a 3G reader – no hunting for or paying for Wi-Fi hotspots. Amazon picks up the tab for the 3G wireless, so you have no monthly payments or annual contracts.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 41%, with the biggest boost coming in the most recent quarter when revenue rose 51% from the year earlier quarter.

Gross margin shrank 0.4 percentage point to 24.1%. The contraction appeared to be driven by increased costs, which rose 51.8% from the year earlier quarter while revenue rose 51%.

The company has now seen net income fall in each of the last two quarters. In the first quarter, net income fell 32.8% from the year earlier quarter.

The company topped expectations last quarter after falling short of forecasts in the first quarter with net income of 44 cents versus a mean estimate of net income of 60 cents per share.

Competitors to Watch: eBay Inc. (NASDAQ:EBAY), Wal-Mart Stores, Inc. (NYSE:WMT), Overstock.com, Inc. (NASDAQ:OSTK), Google Inc. (NASDAQ:GOOG), Barnes & Noble, Inc. (NYSE:BKS), Costco Wholesale Corp. (NASDAQ:COST), GSI Commerce, Inc. (NASDAQ:GSIC), Hot Topic, Inc. (NASDAQ:HOTT), PC Mall, Inc. (NASDAQ:MALL), Apple (NASDAQ:AAPL) and Best Buy Co., Inc. (NYSE:BBY).

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(Source: Xignite Financials)