Tech Hopes Flow Through Amazon

Big things are expected from Amazon ( AMZN) when the online retail giant reports its second-quarter results after the market closes Thursday as investors eye healthy numbers.

With the tech sector finally showing signs of stability, Wall Street is expecting Amazon to show decent growth.

Analysts surveyed by Thomson Financial expect Amazon to post revenue of $4.69 billion, a 16% hike on the same period last year, reflecting growing confidence in online spending. Like many parts of the economy, online retail has felt the effectsof the economic slowdown, although there have been indications that this may be improving.

Amazon rival eBay ( EBAY), for example, beat analysts' estimates in its second-quarter results Wednesday, and other Internet stocks have also done well. Yahoo! ( YHOO) posted solid second-quarter numbers Tuesday and outlined its plans to challenge Google ( GOOG).

Seattle, Wash.-based Amazon, which recently opened an online outdoor recreation store and a Web site offering cell phones and service plans, has kept busy during the downturn.

"Amazon has been adding product sub-categories at a steady clip and recent traffic data to the site points to continued strength in visitation, both of which bode well for revenue growth," wrote Youssef Squali, an analyst at Jefferies & Company, in a recent note.

Earlier this week Amazon also announced plans to buy online shoe retailer Zappos for about $807 million in stock, paying an additional $40 million in cash and stock to Zappos employees. A rumor has also been circulating recently that Amazon may buy Netflix ( NFLX), which would significantly expand the firm's online empire.

Amazon is synonymous with the e-commerce boom of recent years, and is still seen as America's online retail king, blazing a trail for the likes of eBay.

Amazon has been carefully guided through the recession by CEO Jeff Bezos, posting strong first-quarter results earlier this year, and targeting new areas.

Investors will be monitoring Amazon's results for an update on its Kindle e-book technology. Amazon unveiled the latest version of the technology, the Kindle DX, earlier this year, and recently slashed prices on its older Kindle 2.

Amazon has not yet revealed how many Kindles have been sold since the technology was introduced in 2007, although Jefferies & Company's Squali thinks that the product will contribute about $60 million to second-quarter revenue. Specifically, the firm's Media business should see $36 million from e-Book sales, he added.

Amazon, however, is not the only company playing in this space, and faces stiff competition from Sony and even Barnes & Noble ( BKS), which recently launched a new e-bookstore.

Despite analysts' bullishness about Amazon's revenue, Wall Street is less positive about the company's profit. Amazon is expected to post earnings of 32 cents a share, down from 37 cents a share in the year-ago quarter.

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