Amazon Results Don't Match Run-Up

Investors had been giddy with excitement for Amazon.com Inc. (AMZN - Analyst Report) 4th quarter earnings results during regular trading Thursday. Before earnings were announced after the closing bell, AMZN shares had run up over $9 per share (5.17%). But then reality set in...

Even though Amazon.com Inc. posted an earnings beat of 91 cents per share -- the Zacks Consensus Estimate was 88 cents -- the world's largest online retailer fell short on the revenue side, posting sales of $12.95 billion in the quarter, just missing the Zacks consensus of $12.97 billion.

So in after-market trading, AMZN shares dropped 10% immediately -- erasing the entire day's gains, and then some. After starting to creep back up following the initial disappointment, after-market trading remains dismal at this hour.

Part of the run-up earlier was associated with call options on AMZN shares, which expire Friday. But the other part was the optimism about Amazon.com's December quarter, especially following the stellar performances by Apple Inc. (AAPL - Analyst Report) and Google (GOOG - Analyst Report) last week, and reports of double-digit year-over-year online retail growth.

Compared to Amazon.com's 4th quarter of 2009, its numbers are quite favorable: though revenues disappointed compared to expectations, they did grow 36% from $9.52 billion a year ago, and the 91 cents per share beat 4Q09's 85 cents by 7.1%. For the company's 1st quarter of fiscal 2011, Amazon.com guided revenues between $9.1 and $9.9 billion -- in line with current consensus estimates.

Analysts have been modestly optimistic about Amazon.com's 4th quarter earnings results -- 6 of the 33 covering the company had upwardly revised estimates within the past month. But over the past 90 days, the Zacks consensus estimate had actually fallen a penny from 89 cents per share.

Well, as they say: seeing is believing. Those who caught Amazon-fever prior to the company's earnings results might consider this a lesson learned.

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