Amazon Profit Meets Estimates

Elena
02 Feb, 2007
New York City

The company posted net income of 23 cents per share, down from 47 cents per share a year ago, due to $91 million in income tax expenses in the quarter. However, results exceeded the average analyst estimates for earnings of $90.4 million, or 21 cents per share, on $3.77 billion in sales. The stock traded diown 2.6% in pre-open.

[R]7:45AM Amazon Q4 profit declined, despite 34% sales increase.[/R]
Internet retailer Amazon.com Inc. ((AMZN)) reported a decline in Q4 earnings along with quarterly sales increase. The company posted net income of 98 million, or 23 cents per share, down from $199 million, or 47 cents per share a year ago. However, results exceeded the average analyst estimates for earnings of $90.4 million, or 21 cents per share, on $3.77 billion in sales. Amazon said Q4 results were hurt by $91 million in income tax expenses in the quarter, compared with a tax benefit of $38 million in the comparable 2005 period.

Although profits dropped by half, quarterly sales jumped 34% during the holiday shopping season. Net sales for the period were $3.9 billion, up from $2.98 billion in the same period last year, helped by the $122 million impact of changes in foreign exchange rates. The company said it expects Q1 sales of between $2.85 billion and $3 billion, a growth rate of 32% from a year earlier. Amazon.com also predicted 28% annual sales growth of between $13 billion and $13.7 billion.

For the whole fiscal year, Amazon.com reported a 47% profit drop to $190 million, down from $359 million in 2005. Revenue was up 26% to $10.71 billion, compared with $8.49 billion in the previous year. The results were released after the market closed Thursday. Shares of Amazon.com closed up $1.03, or 2.7% at $38.70 on the Nasdaq. The stock traded diown 2.6% in pre-open.


[R]7:30 AM Asian shares closed higher Friday with Japan up while China was down.[/R]
Asian markets finished higher on Friday. In Tokyo, the Nikkei closed 0.2% higher at 17,547.11. Shares of Sony rose 1.6%, adding to gains from Thursday on a broker upgrade. Sumco advanced 3%, as the world second-largest maker of silicon wafers intends to spend $3 billion to more than triple its capacity for producing advanced wafers by 2010. Nikko Cordial, Japanese third largest brokerage house, gained 12.5%. Bucking the market uptrend, Matsushita Electric shed 0.6% on profit-taking.

Hong Kong Hang Seng Index ended 0.7% higher at 20,563.68. Lenovo Group led the advance, as it jumped 7% after posting quarterly net profit rise of 23% from the prior year. The gains came as Credit Suisse downgraded the share to underperform from neutral. The Shanghai Composite index swung from early gains to close 4% lower at 2,673.21. Citic Securities Co., the biggest publicly traded brokerage, dipped 7.3%, Baoshan Iron & Steel Co., No. 1 steelmaker in China, declined 6.5%.

The Kospi index gained 30.24, or 2.2%, closing at 1,413.14 in Seoul. The index advanced 3.1% this week, the largest weekly gain since June 30. Hyundai Heavy surged to a record, adding 5.4% on record growth in Q4 results and Samsung Heavy Industries Co., the world second-largest shipbuilder, gained 4.8%. Other indexes around the region also advanced. Australian S&P/ASX 200 closed 0.3% higher at 5,831.50, while the Singapore Straits Times Index finished 1.6% higher at 3,217.68. Taiwan Weighted Price Index closed 0.9% higher at 7,777.03.


[R]6:30AM European stocks were higher Friday on strong utility sector.[/R]
European markets were higher on Friday. By mid morning, the FTSE 100 in London gained 0.4% to 6,309.8, Frankfurt Xetra Dax added 0.2% to 6,863.03, and the CAC 40 in Paris gained 0.3% to 5,678.51.

Advancers

Eon, the German utility, gained 3.2% on expectations that the company would be spared a costly bid battle for Endesa of Spain after rival bidder Gas Natural abandoned the race. Sainsbury advanced after a group of investors announced they were considering a bid for the supermarket. Sainsbury shares jumped 14.5%. Carrefour added 3.2% as it stated it was close to signing an agreement with the Indian government to set up retail operations in the country. Ahold, the Dutch retailer which posted a drop in Q4 sales in the previous session, gained 1.7%, while French Casino Guichard added 1.6%.

Q4 profit of Volvo missed forecasts, but an improved outlook from the company and the announcement of an extraordinary pay-out helped boost the shares 2.4%. Domestic rival Scania advanced 3.3%.

Decliners

Ericsson, the Swedish telecoms equipment and networks group, led the decliners, down 5.8%, after reporting Q4 earnings that missed expectations and lowering its 2007 growth forecasts. Nokia, which recently merged its networks systems with that of Siemens, fell 0.9%, while Siemens fell 1%.

Shares in Endesa were down 0.6%, while Acciona, the Spanish construction group that holds 21% of Endesa shares, was 2.2% lower.

Oil and gold

Oil prices recovered Friday on continued cold weather in the United States. Crude oil for March delivery rose 18 cents to $57.48 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude for March delivery gained 29 cents to $57.01 a barrel on the ICE Futures exchange in London. Gold opened Friday at a bid price of $656.64 a troy ounce, down from $658.29 late Thursday.

Currencies

The euro was little changed against the U.S. dollar Friday, declining slightly despite signs that the U.S. manufacturing sector was tightening. The euro bought $1.3018 in morning European trading, down from $1.3021 in New York late Thursday. The British pound shed $1.9672 from $1.9677, while the dollar rose to 120.88 Japanese yen from 120.66 yen.