Cramer: In the Amazon Jungle Without a Guide

NEW YORK (Real Money) -- Would it kill Amazon (AMZN) to answer one question with a helpful answer? Does the company have to endlessly stonewall and say that whatever question that is asked isn't relevant or isn't something they care about or monitor?

Last night's call was a stunning reflection of how little Amazon cares about the whole process of reporting results. First, the company reports its widest loss in two years, but makes it clear in the call that:

  1. It doesn't matter.
  2. It is a good thing anyway because they are spending and ramping and ramping and spending.

As my friend Arum Rubinson at Wolfe Research pointed out in a terrific note this morning, "The word 'invest' was mentioned 33 times" on the call and "the only thing missing is a clear sign that the investments are paying dividends."

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There were actual weaknesses, notably in the now-very-competitive Web services business, but Tom Szkutak, the brief or taciturn chief financial officer, made it clear that they were planned weaknesses or at least foreseeable weaknesses. At least he didn't say "fortunate weaknesses."

The company simply cut price to keep business and it is clear it kept a lot of business, but unclear whether it actually did make it up in volume because it isn't going to help you figure that out.

Some people were freaked out by the guidance, which seemed well off the mark. But then again, I don't even know if the company takes the guidance process seriously anymore, so maybe it's some sort of dodge. No way to tell. Pretty zany.   

I will say this about Szkutak: He's an equal-opportunity stonewaller. Some of the analysts seemed eager to gin up some positives, notably that gross margins seemed to have improved, but Tom would have none of it, saying that Amazon doesn't focus on them.

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Geez, I focused on them when I had a lemonade stand with my mom at 1401 Cromwell Road in Wyndmoor.

Nor did he even bother to suggest other than in passing that more people signed up for Amazon Prime this quarter than last year, despite the price increase. I remember when that was a worry factor.

A worry misplaced.

In fact, the only thing that I really got out of the call was how much trouble Japan is in when the country put in that stupid retail tax earlier this year. The decline in spending was so noticeable that it actually hit whatever bottom line Amazon actually cares about, not that they would deign to tell us by how much. Maybe that's why revenue growth decelerated to 21.6% from 22.8%? Who knows?

In the end, this is a company that doesn't deserve to sell at these prices simply because it is such an imperfect security. It deserves a big discount, not a premium.

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No matter. The big-boy momentum funds will stay the course and the people who love the service will keep buying, and I imagine after the stock settles down the bulls will come out and say next quarter is, indeed, the breakout quarter where we see the spending pay off. We sure didn't see it pay off this quarter, that's for certain. 

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

This article was originally published on Real Money at 6:56 a.m. on July 25.

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