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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Can Amazon Remain Immune to Mother Nature?

Amazon Web Services (AWS) likely helped results during the quarter substantially, given that Amazon's cloud computing engine has successfully become part of the infrastructure on which much of the Internet is built. Goldman's Terry believes AWS "revenue growth continued to accelerate into 1Q pushing North American other revenue +53% in 1Q vs. 52% in 4Q." On a sum-of-the-parts basis, Terry believes AWS is worth $37 billion of Amazon's roughly $220 billion market cap, making it an invaluable piece to the Seattle-based company.

Much is always made about Amazon's razor thin operating margins, and that's not expected to change any time, as Amazon continues to reinvest profits into new initiatives, like the recently announced Fire TV, or the just-announced deal with Time Warner's (TWX) HBO to bring certain HBO content to Amazon Prime.
 
Cantor Fitzgerald analyst Youssef Squali is expecting the first-quarter operating margin will be 0.5%, down 60 basis points year-over-year, as Amazon continues to invest in the business. "While we expect 2014 operating margins to remain under pressure from continued focus on investments (more fulfillment centers, expansion of Amazon Fresh, growing video content, etc.) as well as recent price cuts on AWS, this should be partly offset by the $20 hike to Prime membership fee," Squali wrote in the note. "For 2Q:14, current consensus stands at $19.02B (+21.1% Y/Y) for revenue and 1.1% for GAAP operating margin (+60bps Y/Y)." He rates shares "buy" with a $415 price target.

Amazon has been exceptionally busy in recent weeks, launching several new initiatives that were not included in the first-quarter, so Wall Street will be looking to see if Amazon provides any guidance on these launches.

Though the Fire TV was launched earlier this month, it looks as if it's already off to a great start, as the second most popular item in Electronics, behind Google's Chromecast on Amazon among streaming devices, with Apple TV coming in seventh.

Following the HBO announcement, Wedbush Securities analyst Michael Pachter noted this could make Amazon Prime more appealing than Netflix (NFLX), given the breadth and scope of the deal. "We believe the HBO deal positions Prime Instant Video as a viable competitor and potentially more appealing alternative to Netflix," Pachter wrote in a note to clients following the announcement. "Through the HBO deal, in addition to its own original content, Amazon has the potential to offer close to seventy different series that we believe HBO owns outright, with multiple seasons available for the more successful shows. In comparison, we believe that Netflix's original series figure is closer to ten, with up to only two seasons available."

Pachter, who rates Amazon shares "neutral" with a $330 price target, is expecting Amazon to earn 17 cents a share on $19.52 billion in revenue.

Wednesday, Amazon unveiled Prime Pantry Online, which Amazon describes as a place to take advantage of "Low-priced essentials in everyday sizes, delivered to your home."

-- Written by Chris Ciaccia in New York

>Contact by Email.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,113.54 +61.81 0.36%
S&P 500 1,983.53 +9.90 0.50%
NASDAQ 4,456.0160 +31.3120 0.71%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

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