Crunching Through Amazon's Numbers

AMZN's net sales increased 46% to $7.13 billion in the first quarter, compared with $4.89 billion in first quarter 2009. Excluding the $185 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 42% compared with first quarter 2009.

Operating income increased 62% to $394 million in the first quarter, compared with $244 million in first quarter 2009. Excluding the $15 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, operating income would have grown 56% compared with first quarter 2009.


Net income increased 68% to $299 million in the first quarter, or $0.66 per diluted share, compared with net income of $177 million, or $0.41 per diluted share, in first quarter 2009.


Here is a quote from founder and president of Chartwell Asset Management:

"Stock retreating in after hours trading on what's being dubbed "soft" guidance. Basically, Amazon's guidance was in line with prior expectations. Apple can get away with overly conservative guidance and that's just Apple being Apple, but when Amazon does it they get smacked. No wonder it's called the silly season. There's not a single metric here that looks bad."


I don't see a bear case here.  There aren't many $50+ billion companies growing revenues at 40% or higher at a time when US is still facing 10% unemployment.  AMZN added 140 million new international customers this past quarter.  The retracement after hours takes AMZN back to the same level where it was only three days ago.  There are two charts on the right, both I stole from optionmonster website which obtained the material from the conference call after hours.  The first one shows GAAP operating income and second one highlights domestic and international revenue.  


On a technical basis, even after hours move, the rising support line is still fully intact (see chart to the right).  A break below $138 would change the short term direction.  Bottom line is there is not a single thing in the report that looks bad and as stock is pulling back to support line, I believe it is a great buying opportunity here.