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Amazon's Black Box

Stocks in this article: AMZN AAPL

NEW YORK ( TheStreet) -- Amazon's (AMZN) second-quarter earnings report saw the Seattle-based retailer miss on both the top and bottom lines, as the company continues to invest in growth. Where that growth is coming from, though, is anyone's guess, since the company is a black box.

Amazon lost 2 cents a share on $15.7 billion in revenue during the quarter. Analysts polled by Thomson Reuters were looking for earnings of 5 cents a share on $15.73 billion in revenue. Third-quarter guidance was weak, with the company expecting sales between $15.45 billion and $17.15 billion. Amazon is forecasting an operating loss between $440 million and $65 million, compared to $28 million in third quarter 2012.

There's no doubt that Amazon continues to reinvest in a variety of different segments, continuously expanding into new areas. "We believe that an improving macro picture is helping stimulate consumer demand for Amazon's products, augmented by strong performance at AWS (Amazon Web Services)," wrote Cantor Fitzgerald analyst Youssef Squali in a research note, noting that "Amazon remains keen on expanding and innovating and as such, remains in investment mode (particular in technology and content,)," thus hurting operating margins in the short term.

However, it's hard to decipher where that reinvestment's going, since Amazon doesn't really break down revenue or give much additional detail on the earnings call. Last night, I tweeted that Amazon's earnings call could be summed up in 9 words.

Sure, Amazon gives you revenue broken down into Media, Electronics and other general merchandise, and Other (which includes AWS), but when asked for more clarity, or how Kindle Fire sales are going, there's a generic "They're going well, we're super happy, but there's not a lot more we can add" response from Amazon's management. Contrast that with Apple (AAPL), which breaks down revenue by product line, and gives Wall Street as much detail, perhaps more, than it needs.

When asked for more clarity on third-party (3P) units and how that's affecting paid unit growth, Amazon just said that 3P was 40% of total units this quarter, and that the company was happy with it. Nevermind the fact that paid unit growth continued to slow, showing 29% year-over-year growth.

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