This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Amazon: It's All About the Margins

NEW YORK ( TheStreet) -- Amazon (AMZN - Get Report) gets set to report first-quarter earnings after the close of trading, and investors will be looking to see whether the Internet giant's margins are improving.

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 - Get Report) 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.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.64 0.00%
AMZN $683.85 0.00%
EBAY $24.26 0.00%
GOOG $698.21 0.00%
SCOR $30.52 0.00%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs