Amazon earnings jump 68%

By Blake Ellis, staff reporter


NEW YORK (CNNMoney.com) -- Amazon.com posted first-quarter earnings Thursday that topped Wall Street's expectations, but the online retailer's outlook was less rosy.

Amazon reported a profit of $299 million in the first quarter, up 68% from a year ago. Earnings per share totaled 66 cents, compared with 41 cents in the same quarter last year.

Sales rose 46% to $7.13 billion from a year ago.

Analysts polled by Thomson Reuters were looking for earnings of 61 cents on sales of $6.87 billion.

For the second quarter, Amazon said it expects sales between $6.1 billion and $6.7 billion. Analysts forecast second-quarter revenue of $6.4 billion.

After the release of the company's results, shares of Amazon (AMZN, Fortune 500) fell nearly 6% in after-hours trading.

Investors were spooked by the outlook, said Sameet Sinha, a senior analyst at JMP Securities.

"[The forecast] is implying some sort of slowdown in growth," said Sameet Sinha, senior analyst at JMP Securities. "It seems that they're being conservative about revenues from Kindle because of the competition from the iPad."

Amazon's electronic e-reader, the Kindle, is the company's best selling product. But with Apple's (AAPL, Fortune 500) recent release of the iPad, which also sells electronic books, Amazon is going to have to step up its game.

And since Amazon was forced by publishers to raise the costs of its e-books, it can no longer use the promise of lower prices to attract customers and gain a competitive edge. But the company is ramping up its book count, said CFO Thomas Szkutak on a call with investors

"One of the things that we're doing is we're expanding our selection pretty dramatically," said Szkutak when asked how Amazon plans to differentiate its product.

Szkutak added that the Kindle had 90,000 titles when it launched and now has more than 500,000.

Amazon also boosted its advertising to promote the Kindle, which Sinha said was likely due to the introduction of the iPad as well. Spending on marketing climbed 57% in the first quarter.

While Amazon doesn't break down revenue from the Kindle, sales grew during the quarter and demand remains strong, Szkutak said.

The company's first quarter results also reflect the performance of online shoe and apparel store Zappos, which the company bought in November of last year. Szkutak said Zappos experienced positive growth in the quarter but didn't disclose its sales.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,810.06 91.06 0.51%
Nasdaq 4,712.97 11.10 0.24%
S&P 500 2,063.50 10.75 0.52%
Treasuries 2.32 -0.02 -0.86%
Data as of 10:52pm ET
Company Price Change % Change
Bank of America Corp... 17.12 0.12 0.71%
Kinder Morgan Inc 39.75 -0.17 -0.43%
Apple Inc 116.47 0.16 0.14%
Intel Corp 35.59 -0.36 -1.00%
Microsoft Corp 47.98 -0.72 -1.48%
Data as of Nov 21

Sections

This arrangement, announced Friday, illustrates how the lines have blurred between traditional TV networks and newfangled options like Netflix. More

The Obama administration is touting that its immigration action will boost wages. But the hike amounts to only $170 a year by 2024. More

Obama doesn't have the authority to create a startup visa, but part of his reform announcement could include a workaround for entrepreneurs: 'parole status.' More

Nearly half of all Americans say there's a chance they'll have to work during a holiday between Thanksgiving and New Year's, according to a new poll. And one in four say they'll have to work whether they want to or not. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.