This Day On The Street
Continue to site right-arrow
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
TheStreet Open House

Amazon's Black Box

NEW YORK ( TheStreet) -- Amazon's (AMZN - Get Report) 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 - Get Report), 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.

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $123.25 0.00%
AMZN $370.56 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs