Let's Not Go Crazy About Amazon's Earnings

NEW YORK ( TheStreet) -- Any way you look at Amazon's (AMZN) earnings, reported Thursday, they were good. But there are still two ways to look at them.

Investor's Business Daily went the common and incomplete route. In both their headline and lead, they said that Amazon "crushed" expectations.

We soon got this: "For the quarter, Amazon said it earned 28 cents a share minus items, down 43% from 44 cents in the year-earlier period but 21 cents higher than the average estimate of 41 analysts polled by Thomson Reuters."

We soon got this: "For the quarter, Amazon said it earned 28 cents a share minus items, down 43% from 44 cents in the year-earlier period but 21 cents higher than the average estimate of 41 analysts polled by Thomson Reuters."

Instead of putting "crush" in their headline, Business Insider went the right route. They put "equity-method investment" in their headline. The cartoonishly large portion of Amazon beat, after all, came from equity-method investments. This -- Amazon's investments in companies like Living Social -- is legitimate income, but not as predictable, reliable or meaningful as income from their operations. Rather than hyperventilate about a beat the size of Bolivia, the media should (like Business Insider) make the apt distinction:

"Equity-method investment income accounted for around $0.19. If that generated no income, then Amazon would've reported EPS of around $0.09, which is still ahead of the $0.07 that analysts were expecting."

It was a really solid beat, part of a really good quarter. But let's not get crazy.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page.

For his "Business Press Maven" column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers.

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