Investors Cheer Amazon Q4 Operating Income, Ignore Tepid Outlook

Andrew Klips |

Jeff Bezos, CEO of Amazon.comShares of Amazon.com, Inc. (AMZN) ran in extended trading on Tuesday to recover all of the losses from the previous two days to hit all-time highs as investors looked past declining profit and soft guidance and focused on operating income during the fourth quarter for the e-tailer.

The Seattle-based company reported that net income fell by 45 percent to $97 million, or 21 cents per share, in the fourth quarter, compared with $177 million, or 38 cents per share, in the year prior quarter.  Revenue in the latest quarter equaled $21.27 billion, ahead of $17.43 billion in Q4 2011.

Analysts were expecting $22.26 billion and earnings per share of 28 cents.

While net income decreased, operating income – regarded as a key metric of performance – surged 56 percent to $405 million during the quarter, up from only $206 million in the year prior quarter.  $2 million of the increase came as a result of a favorable exchange rate compared to the prior year’s quarter.

The company said that, for the second straight year its tablet was the most popular item for customers. At year-end, Kindle Fire HD, Kindle Fire, Kindle Paperwhite and Kindle held the top four spots on the Amazon worldwide best seller charts since launch.

“We’re now seeing the transition we’ve been expecting,” said Jeff Bezos, founder CEO of Amazon.com in a corporate statement.

For the complete year, the world’s largest online retailer reported net sales increased 27 percent to $61.09 billion, compared to $48.08 billion in 2011.  Operating income for the year fell by 22 percent to $676 million from $862 million the year earlier.  Net loss for 2012 was 39 million, or 9 cents per share, compared with net income of $631 million, or $1.37 per share in 2011.

Looking ahead, the company said that it expects net sales in the range of $15.0 billion and $16.6 billion, up between 14 percent and 26 percent from Q1 2012.  Analysts were expecting revenue of $16.86 billion.  The company gave a wide range for operating income of a net loss of $285 million and a profit of $65 million, including $285 million for other items, compared to a profit of $192 million in the year prior period.

On Friday, shares of AMZN hit $284.72, a record high, only to fall all the way back to Tuesday’s closing price of $260.35.  After the earnings report after Tuesday’s closing bell, shares soared in excess of $290 each, representing gains of more than 10 percent and a fresh new high.

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Companies

Symbol Name Price Change % Volume
AMZN Amazon.com Inc. 816.11 16.95 2.12 3,819,600
MOKO MOKO Social Media Ltd. ADR (Sponsored) New n/a n/a n/a n/a

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