For Amazon, a Penny Is a Gaping Hole
Amazon.com was this close to hitting their earnings estimates, at least according to Forbes and other media outlets. That, though, is wishful thinking on wheels.
Here’s what Forbes said in its headline: “Amazon Q2 Sales Up 29%, But Earnings Just Miss.”
Got that? They just missed. This close. To emphasize the point, they called Amazon’s second-quarter profits, released Thursday, a “slight” miss.
Sure enough: Net income, which fell 96 percent to $7 million, was 1 cent a share — and Wall Street estimates were for 2 cents.
Amazon only missed by a penny. This close.
Here’s the rub, though: The media rarely grasps proportionality. Since expectations were for only 2 cents, a 1 penny miss was huge.
One penny off of 87 cents amounts to little more than a technical miss, but with the market expecting only 2 pennies, it’s the size of Bolivia.
Moreover, this is Amazon’s second straight miss and its forecast came in light, too. That should color perception, too.
Look: Amazon is up to its old tricks, only more so. It is investing in warehouses to compete with Wal-Mart Stores and eBay, and tablets to go up against Apple and Google, all the while hoping to turn a meaningful profit at some undetermined time in the future.
But so far they are missing, big time.
—By TheStreet.com Contributor Marek Fuchs
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TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks. At the time of publication, Marek Fuchs had no positions in any of the stocks mentioned in this column.