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Mark Vickery

Amazon Mixed, Stock Still Climbs

by Mark Vickery

April 25, 2013 | Comments : 0 Recommended this article: (0)

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After the bell Thursday, Amazon ( AMZN - Analyst Report ) reported mixed results for its Q1: an earnings beat on slightly lower revenues and downwardly revised guidance... and the stock is still up following the announcement.

Amazon, the world's biggest Internet retailer, posted earnings of 18 cents per share on quarterly revenues of $16.07 billion. This was a beat on the bottom line but a slight miss on the top for Amazon, whose stock continues to trade near all-time highs.

This, despite a low-end guidance range for operating income of -$340 million (far below Q212's $107 million), and a signal that International sales growth may be slowing. After-market traders paused a minute before buying more shares. But after climbing 2.2% at the close of regular trading, Amazon is up another 2.5% as of now.

The Zacks Consensus Estimate was for 10 cents per share, which marks the first time since Q1 2012 that Amazon has posted a positive earnings surprise. That said, EPS was nowhere near last year's 28 cents per share, though revenues were up 22% year over year.

Investors have grown accustomed to Amazon's ongoing long-term strategy of investing capital into expanding its businesses and using its synergies to venture elsewhere, and thus pay relatively less attention to the quarter-to-quarter numbers. This explains how a company like Amazon that hadn't posted an earnings beat in a year could still be trading at a dizzying price-to-earnings multiple north of 180x.

At first glance, Amazon looks to be taking on Netflix ( NFLX - Analyst Report ) here a bit, creating new TV content through Amazon Studios and its Prime Instant Video, expanding and updating licensing agreements for content elsewhere. Much the way Amazon used its vast resources to take on eBay ( EBAY - Analyst Report ) in online retail options and Groupon ( GRPN - Snapshot Report ) in deals on goods and services, expanding entertainment content seems to be another area where CEO Jeff Bezos is saying, "Game on!"

We'll have an extended take on Amazon's Q1 by tomorrow morning.

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