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

AMZN's Miss: No Big Deal

NEW YORK ( TheStreet) - Amazon (AMZN - Get Report) shares dropped 8.9% to $177.14 on Wednesday after fourth-quarter revenue expectations came in lighter than expected. Although revenue grew 35% to $17.43 billion, analysts were looking for $18.25 billion.

The revenue miss sparked questions about whether Amazon's large investments in its Kindle Fire tablet and warehouses are actually paying off.

But during a conference call with analysts, Amazon Chief Financial Officer Tom Szkutak defended the company's practice of continued heavy investing and said it has no plans to change its strategy.

"There's a lot of interesting opportunities we continue to invest in," he said.

Rather than focusing on short-term quarterly results and Wall Street projections, Seattle-based Amazon is more concerned with investing in products that will pay off five to ten years down the line.

Analysts still remain largely bullish on the stock's long term prospects, despite skepticism from spooked investors who rushed to sell shares following the company's earnings.

"We think we could see some further weakness in Amazon shares in the very near term, but we'd be taking advantage of further pull-backs as buying opportunities," J.P. Morgan analyst Doug Anmuth wrote in a note to clients. "We're encouraged by the overall unit growth and potential gross merchandise volume numbers, which we believe are strong gauges of Amazon's success." Gross merchandise volume is the value of all merchandise sold across Amazon and its marketplaces.

As the company shifts from its role as an online bookseller to a technology and entertainment provider, it is upping its investment in hardware, infrastructure and digital content.

Amazon is also taking a small loss on the sale of every Kindle Fire device, with the hope that the intention of making this money back later through the sale of content like movies, TV shows and books to the tablet.

During the fourth quarter, Amazon spent $862 million on technology and content, up 66% from the same period last year.

Fulfillment costs also grew 52% to $1.6 billion as the company invests in new warehouses to boost revenue growth.

"We reiterate our buy investment rating on shares of, and believe that the pullback in the stock presents an opportunity for growth-oriented investors looking for the ecommerce leader to resume to operating profit dollar growth in 2H 2012," wrote Deutsche Bank analyst Jeetil Patel.

--Written by Olivia Oran in New York.

>To follow the writer on Twitter, go to

>To submit a news tip, send an email to:

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
AMZN $673.26 0.00%
AAPL $117.81 0.00%
FB $105.45 0.00%
GOOG $750.26 0.00%
TSLA $231.61 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs