In the fourth quarter, Amazon reported operating margins of 1.5%. That's down sharply from 3.7% during the same period last year, as return on invested capital fell to 22% during the quarter, from 34% in the fourth quarter of 2010.
The Seattle-based online retailer has been expanding into seemingly every business over the past few years, as it tries to drive people to its website to buy more products.
Amazon has been the only company outside of Apple (AAPL) to gain success with its tablet strategy, having launched the Kindle Fire in November 2011. The goal of Amazon's tablet effort is to drive sales on its website, albeit at very low margins.Last quarter's big revenue miss during the all-important holiday season, however, sparked concerns over whether Amazon's all-encompassing strategy will pay off. Raymond James analyst Aaron Kessler isn't concerned about revenue growth, but margins are making him take a wait-and-see approach. "Based on our checks and industry data points, we expect strong top line growth for Amazon in 1Q," Kessler wrote, in a research report. "While we remain positive on the secular outlook for Amazon, near term continued uncertainty around timing of margin improvements keeps us on the sidelines." The analyst rates Amazon shares "market perform." Analysts polled by Thomson Reuters expect Amazon to report earnings of 7 cents a share on $12.899 billion in revenue. Independent analysts polled by Estimize expect Amazon to report earnings of 11 cents a share on $13.03 billion in revenue.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV