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Tech Check
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CNBC.com Amazon Earnings |
It's the news that investors certainly did not want to get from online retailer Amazon, hoping against hope that good deals on the internet would help buoy the company during hard economic times.
But it appears Amazon [AMZN
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] will be bitten as badly as anyone else trying to sell things on the lip of a recession, no matter how good the deals might be.
Amazon did beat Wall Street expectations for its third fiscal quarter, reporting 27 cents against the 25 cents analysts were anticipating. That bottomline performance came on light revenue of $4.26 billion. Analysts projected $4.28 billion.
A bright spot for the company comes from North American sales, up 29 percent on the quarter, 2 points better than Wall Street projections. But international sales did take a hit, confirming some analyst concerns, particularly those at Barclays, that a strengthening dollar would begin to hurt the company's overseas business.
The company's operating income of $231 million was in line with expectations.
And it looks as though those monetary headwinds will combine with a softening economy that will hurt the company's fourth quarter business as well as its full year performance. Amazon now anticipates $230 million to $390 million in operating income in the current quarter, including $85 million in stock based compensation and other intangibles, when analysts expected $402 million or more. Amazon's fourth quarter revenue range is now $6 billion to $7 billion when analysts had projected a figure closer to $7.1 billion.
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Amazon did point to sales of its nascent electronic book reader as a bright spot for the company with 185,000 titles now available. Officials say Kindle titles now account for 10 percent of unit sales for books sold on the site.
Still, it's the company's guidance that is killing these shares, down 15 percent on the news, touching $41 a share before bouncing slightly. If these levels hold, Amazon now trades at a fresh, 52-week low. The company's outlook now offers fresh data pointing to a significant slowdown among holiday shoppers, and apparently net retailers may not be the safe-haven some investors hoped they would be.
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