Amazon.com Inc. Earnings: Net Income Beats Expectations

Rising costs hurt S&P 500 (NYSE:SPY) component Amazon.com Inc. (NASDAQ:AMZN) in the fourth quarter as profit dropped from a year earlier. Amazon.com 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 Fourth Quarter

Results: Net income for Amazon.com Inc. fell to $177 million (38 cents per share) vs. $416 million (91 cents per share) a year earlier. This is a decline of 57.5% from the year earlier quarter.

Revenue: Rose 34.6% to $17.43 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: AMZN beat the mean analyst estimate of 16 cents per share. It fell short of the average revenue estimate of $18.2 billion.

Quoting Management: “We are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices this holiday season, making Kindle our bestselling product across both the U.S. and Europe,” said Jeff Bezos, founder and CEO of Amazon.com. “Our millions of third-party sellers had a tremendous holiday season with 65% unit growth and now represent 36% of total units sold.”

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 40.7%, with the biggest boost coming in the second quarter when revenue rose 51% from the year earlier quarter.

The company has now seen net income fall in each of the last four quarters. In the third quarter, net income fell 72.7% while the figure fell 7.7% in the second quarter and 32.8% in the first quarter.

The company topped expectations last quarter after falling short of forecasts in the third quarter with net income of 14 cents versus a mean estimate of net income of 23 cents per share.

Gross margins grew 0.3 percentage point to 20.7%. The growth seemed to be driven by increased revenue, as the figure rose 34.6% from the year earlier quarter while costs rose 34.1%.

Looking Forward: Expectations for the company’s next quarter results are lower than they have been. Over the past sixty days, the average estimate for first quarter of the next fiscal year has fallen from 46 cents per share to 38 cents. For the fiscal year, the average estimate has moved down from $1.18 a share to $1.15 over the last ninety days.

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), and Best Buy Co., Inc. (NYSE:BBY).

Stock Performance: Shares of AMZN were up 1.3% from the previous close.

Investing Insights: Will the iPad 3 Be the Next Catalyst for Apple’s Stock?

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com