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Amazon's Earnings: Wall Street Is Cautious (Update 1)

Updated from 8:35 a.m. EDT to provide JPMorgan analyst comments.

NEW YORK (TheStreet) -- Amazon's (AMZN) first-quarter earnings were a mixed bag, as the company beat analyst expectations on the bottom line but missed on the top line.

Amazon earned 18 cents a share on $16.07 billion in revenue, a year-over-year increase of 22%. Analysts polled by Thomson Reuters were looking for 8 cents a share on $16.14 billion in sales.

Second-quarter guidance was weaker than expected, with the company expecting revenue between $14.5 billion and $16.2 billion. Analysts surveyed are looking for $15.825 billion in sales.

For the quarter, Amazon said unit growth was 30% year over year, which slowed by 200 basis points from the last quarter, albeit a slower rate than in previous quarters. Unit growth has continued to slow, with digital seeing faster growth than physical, but it's slowing nonetheless. On a conference call, Amazon said the overall growth rate is being helped by the ecosystem which is built more in North America.

Amazon's slowing unit growth and weak outlook has some analysts on Wall Street concerned about the stock's near-term future. Here is what some analysts had to say about the results:

Oppenheimer analyst Jason Helfstein (Outperform, $325 PT):

"While the AMZN story remains on track with strong gross profit growth, the company is seeing slowing unit growth, which mgmt blamed on tough comparisons. While AWS, 3P and lower shipping costs are driving margins, the shift to digital media is obscuring 3P unit statistics, and may cause some near-term investor confusion. Gross profits increased 35% y/y, 14% above our estimate, while operating income was 19% above consensus. Guidance for 2Q was below consensus estimates, but given the upside to 1Q, and the company's history of beating guidance, we believe investors will remain involved in the stock."

UBS analyst Eric Sheridan (Neutral, $275 PT):

"Revenues were about inline with our estimate and Street consensus ($16.1b, 22% growth YoY, 24% ex-FX). North America grew 26% YoY and beat our estimate ($9.4b vs. our $9.1b), while International revenues grew 16% YoY (21% ex-FX) and came in slightly below our estimate ($6.7b vs. our $6.9b). We expect Amazon to remain relatively range bound based on these results as investors digest the puts & takes from slowing paid unit growth and increasing near term margins."

Cantor Fitzgerald analyst Youssef Squali (Buy, $315 PT):

"Amazon reported mixed 1Q:13 results, light on the top line but higher on the bottom line. Most impressive to us was gross margin, which was up 260bps Y/Y. This has become a trend for Amazon over the last few quarters, suggesting that 3P growth continues to outstrip 1P growth, with further margin leverage from AWS, digital products and shipping. Strength in North America was offset somewhat by weakness in international."

Canaccord Genuity analyst Michael Graham (Hold, $300 PT):

"Amazon's Q1/13 results were marked by solid growth, especially in North America, while International growth stalled even after adjusting for FX. Revenue guidance was mostly in line, but slightly more bearish than usual on the low end. With the current investment cycle leading to prolonged low margins, we believe the stock may stall for a bit in the face of a decelerating top line, although we note structural / strategic positives should lend support."

JPMorgan analyst Doug Anmuth (Neutral, $285 PT):

"Amazon's 1Q13 results were mixed and overall support our view that gross profit and other key metrics across the Amazon platform could continue to slow in upcoming quarters. Gross profit has become an important proxy for Amazon's top-line growth given the shift to 100% gross margin third-party (3P) and AWS business lines, and gross profit growth of 40% in 2012 helped offset slowdowns in both revenue and units."

Amazon shares were sharply lower in Friday trading, off 6.5% to $256.85.

--Written by Chris Ciaccia in New York

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