back to article Amazon's profit disappoints, thanks to Apple's iPad success

Amazon reported disappointing second-quarter profit on Thursday, as competition from Apple, weakening European currencies and shrinking consumer spending ate into the company's bottom line. Shares tumbled 15 percent following the announcement. CEO Jeff Bezos said sales for its Kindle e-book reader were accelerating, but they …

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  1. Anonymous Coward
    Anonymous Coward

    Kind of forced out of being a customer...

    I have always liked Amazon, a great company to buy from. I've been a customer for over 10 years.

    Too bad I can't be bothered to shop from them any longer. I just recently noticed that Amazon.ca started shipping via courier, instead of by Canada's postal service. Couriers deliver during business hours, so if you work doing those you have to pick up your package at a depot, which is normally in the middle of nowhere. I don't have a car, so it's no longer a convenient way of purchasing things. I don't work somewhere where I can receive mail.

    Obviously, I'm just complaining because I hope someone will notice. Don't make me go to Wal Mart!

    1. Dave 142

      a

      They do this for some packages in the UK, but not all. I had one package that came by courier and they didn't even leave a note saying that they'd failed the delivery, then did this twice again before sending the package back to amazon. They then sent it properly through the post and I got it straight away. I won't buy from anyone that uses these awful courier companies now because it's basically a waste of my time.

    2. Anonymous Coward
      Anonymous Coward

      They did much the same in the UK

      Most of the deliveries ended up back with Royal Mail after about a year during which I couldn't order anything. Just have to keep complaining and hope the rash cost saving hits their bottom line as much as you think it should

  2. Mark Dowling

    Here's a thought for Jeff Bezos

    If you're doing the majority of your business outside the US, maybe you should start launching models outside the US, and let the US wait for the new graphite model instead of the other way round?

  3. Arctic fox
    Flame

    A bad result?

    "Net income for the quarter grew 45 percent to $207m, or 45 cents a share, well below the 54 cents analysts had projected. Amazon said operating profit in the current quarter would be between $210m and $310m, which was also much less than Wall Street had been expecting. Sales grew 41 percent to $6.57bln."

    This is a "bad" result? Net income "only" increased by 45%? One sees this time and time again - "results disapoint (anal)yst's expectations". The results are by any rational standards excellent, the analysts however the bunch of overpaid tealeaf readers that they are had totally irrational expectations IMHO. The company's shares went down 15%? Because they disapointed a group of people whose capacity to predict future events is provebly worse that the average weatherforcaster? This is preposterous. A group of analysts make a guess about where a companies perfomance is going and they get it WRONG. What is the response? They are sacked for incompetance? No, the company whose performance they have utterly failed to predict correctly gets punished! Someone can explain this to me?

    1. Anonymous Coward
      Anonymous Coward

      Too much of the stock market only thinks of the short term

      The answer unfortunately is the short term nature of most of the stock market. After the analysts had put out their report / guess on the performance of amazon a bunch of stock managers will have looked at the price of the shares versus the expected earnings, thought that looks cheap and bought stock. When amazon announced it's earnings were less than the prediction same stock managers would see the price / earnings ratio was lower and sold the stock. Hence the drop is stock price as it is sold off.

      Odd behaviour when the best stock market investor, Warren Buffett, made his billions largely by taking a long term view (10, 20+ years). Too many bankers chasing a short term profit, where have we heard that before?

      1. Arctic fox

        Good point

        In practice the casino that is the stock market creates a situation where the bookmakers (read Invesment Brokerages) need to "make a book" on short term share price movements (the next 3 - 6 months) and for that they need information about "form". A great deal of that "information" is based on the tealeaf readers guesses about the next 3 - 6 months with the results that we see. WB whom you mention evaluates the companies longterm strengths and potential and invests accordingly. He would no doubt ticket Amazon shares as a buy opportunity now at a 15% discount? I fear that the stockmarkets always were casinos whatever their apologists might claim. Indeed in the late eighteenth century when the modern SMs started to develop they were regarded with a great deal of suspision for exactly that reason.

    2. Anonymous Coward
      Anonymous Coward

      Investors listen too much to analysts

      How often do analysts get it right? They are a waste of space yet they influence investors and hence the share price.

      They always put spin on their predictions after the event.

    3. fandom
      WTF?

      Several things

      In the first place you've got to understand that the Price/earnings ratio for Amazon is above 50, that's huge, the average is about 15, that means that a 45% increase isn't so good.

      It also means that Warren Buffet wouldn't touch the stock with a ten foot pole.

      As for analyst not being sacked, don't bet on it, if they keep making the wrong guesses, who is going to pay for they 'research'?

      But the main point is the company isn't hurt at all, the stock comes down but, so what? The warehouses are still there, the web page is still up, customers are still buying, ...

      Traders who bought at 151$ are damaged but they should know they can't always win

    4. Geoff Campbell
      Happy

      What we have here....

      ....is a failure to understand how the stock markets work.

      The shares fell 15%, because they had risen excessively based upon the expectations of earnings of 54c/share. So, when the announced earnings were lower, the shares dropped back to the level they would have been had the predictions been for earnings of 45c/share.

      So, the 15% drop is only a problem if you bought shares over the last few weeks at the artificially high price. Which is why share investments should be for the long term, if you have any sense.

      GJC

  4. gimbal
    Paris Hilton

    Oh no, the money grew but not as much as expected... ?

    I guess I sure am a noob at this Stock Market game.

    Their profits grew, but not as much as the guessmen had guessed... and, so, some people in the market might now feel disappointed about it?

    If there was an epic way in which to scratch one's own head, in wonder, I suppose I'd be doing so, right now. it all looks to me like something even less complex than a good old game of chess.

    Paris is my bookie and broker, aight?

  5. Jeremy Chappell

    Wasn't it the Nook?

    I thought it was the Nook that was giving Kindle 2 sleepless nights. The price drop to $10 below the Nook would seem to suggest it was the Nook and not the iPad.

    I'm not at all sure the iPad will actually be bad for Amazon long term, I have an iPad with the "Kindle App" and I've bought more books for it than I have for "iBooks" (because there is a far wider selection of Kindle books). Ultimately I think the iPad will be good for Amazon; Apple want to sell iPads, while Amazon want to sell Kindle Books (the Kindle is a delivery platform - not a product in and of itself). I don't see the needs and aspirations of Apple and Amazon in conflict over the iPad.

    Now the Nook, from Amazon's point of view the Nook is pure evil.

    1. Arctic fox
      Paris Hilton

      Little too subtle for......

      ...........stripy shirt and braces brigade. I agree with you that given Kindle is crossplaform Amazon know what they are doing. What we are witness to is grotesque expectations in advance of their currents results followed by an equally braindead reaction in response to those results. 15 % off the share price? That would only be rational if the results were genuinely bad, which they were not - far from in fact. This simply demonstrates what we have seen time and again, the stock markets are casinos - not any kind of rational mechanism for raising capital for investment.

      Paris because she at least doesn't pretend that she gives a s*** about the long term.

  6. Anonymous Coward
    Unhappy

    Call me a luddite if you want to,

    but I like real books, of the kind that can't be stolen from me at the whim of the company I bought it from (see: Amazon, Kindle, 1984) and that I can pass on to somebody else to read.

    1. Geoff Campbell
      FAIL

      OK, I will. You're a luddite.

      There's nothing unreal about eBooks. Books are about the words they contain, not the media they are delivered on.

      By all means avoid organisations that implement kill switches, indeed I urge you to do so, and by all means use paper media if that suits you better than electronic (personally I use a mixture, because my Sony Reader is just *so* convenient, and opens up a whole world of free reading, but I also still buy dead trees, too), but dogmatic assertions that paper media are "real" books, and electronic ones therefore aren't, is just dumb.

      GJC

    2. This post has been deleted by its author

      1. FARfetched

        You're missing crucial data here

        «I'm fairly willing to bet that once your two-year warranty has expired, so do your books - if your device goes kaput.»

        I don't know about B&N, but Kindle books can be stored on your computer, your Kindle (if you have one), and Amazon's cloud. Did you accidentally delete one of your Kindle books? Pull it back down again, no charge. Same deal if you have a Kindle & it gets stolen or broken.

        Apple's iBooks are at least on your (iTunes-based) computer as well as your iPad/iPhone. I'm not sure what their policy (or B&N's) is about re-downloading, but I wouldn't be surprised to find it similar to Amazon's.

        Dead-tree books have advantages, to be sure — I always buy dead-tree versions of field guides for their color illustrations, for example — but you're glossing over some of their disadvantages: once you get past drying them out or taping torn pages, the only answer is to buy a new one. They can't be replaced for free if stolen/destroyed, they can't be updated. Then there's that whole storage thing… if you have 1500 ebooks and 1500 dead-tree books, and you have to suddenly evacuate your premises, you can grab one smallish gadget and have your entire library with you.

        The best way to ensure longevity of ebooks is to buy DRM-free books and convert them to newer formats as needed. It's harder to kill-switch a non-DRM ebook too — 'cause it isn't necessarily on the device in question.

  7. Tron

    Great expectations.

    Who are these 'analysts'? Clearly they don't know what they are talking about if their 'guess' is wrong. That's not Amazon's problem. Anyone who gambles money on analysts' forecasts is a fool. The credit crunch was caused only partly by greedy bankers. The stock exchange turns the economy into a casino, manipulated by the self-deceiving and frequented by spivs on the make. That is a fundamentally bad thing. Did anyone learn anything from the South Sea Bubble? Clearly not, as Western economics has been a history of repeating the same errors for three centuries. Do they teach these idiots anything on economics and MBA courses?

  8. G Murphy
    Coat

    Anyone heard of economics?

    A stock will be priced not just with next quarters earnings in mind but the entire future earnings of that company. It's not that investors are 'disappointed' so they sell it, like a computer game they're bored with, but rather that a slowdown in the rate of sales growth has implications for the future earnings which is therefore reflected in the price of the stock. It is also likely to affect the dividends paid, if any, which will also form a substantial part of the valuation.

    In short, it's not really a shock when stocks go down because companies underperform. All this nonsense about speculators bringing about the end of the world is just bs frankly.

    Wikipedia: Efficient Market Hypothesis

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