The Amazing Amazon (AMZN)

Amazon.com (NASDAQ:AMZN) came with numbers that are pleasing Wall Street again.  Even after that meteoric rise.  Net sales increased 35% to $2.89 billion in the second quarter; Net income increased 257% to $78 million in the second quarter, or $0.19 per diluted share. Consensus estimates out of First Call put the numbers at $0.15 EPS on revenues of $2.81 Billion.

NEXT QUARTER GUIDANCE:  Net sales are expected to be between $3.0 billion and $3.175 billion; Operating income is expected to be between $75 million and $110 million, or grow between 88% and 175% compared with third quarter 2006. This guidance includes $50 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional intangible assets are recorded and that there are no further revisions to stock-based compensation estimates.  ESTIMATES are $0.15 EPS & $3.01 Billion revenues.

FISCAL 2007 GUIDANCE: Net sales are expected to be between $13.80 billion and $14.30 billion; Operating income is expected to be between $540 million and $640 million, or grow between 39% and 65% compared with 2006. This guidance includes $185 million in the same charges as above.  ESTIMATES are Fiscal December-2007 $1.01 EPS and $13.85 Billion.

SYNOPSIS: On the numbers alone, the earnings guidance numbers have to be interpolated but the revenues are both above the mid-point for next quarter and the fiscal year. The company did note that revenues were impacted favorably by $46 million in the quarter, but it is still 33% growth ex-currency and seems to be pleasing the street in after-hours trading.  Shares tanked at the end of the day in a week market by more than 3% to $69.25, but shares are now up almost 8% back above $74.00.

Amazon is also sticking with the aggressive Amazon Prime feature, or so it seems with the promotion.  This has been a pro and a con for many an analyst, but if it was deemed poor internally then the company would consider something different.  That massive short interest looks to be having some advantages for investors who stuck with the company.  You can bet that Jim Cramer will be touting this as one of his "New Four Horsemen of Tech" after this reaction.  Here was our preview ahead of the numbers earlier today.

Jon C. Ogg
July 24, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.