RICHARD GREENFIELD, ANALYST, BTIG
“The reality is setting in that the negative effects of Zynga and credits business will lead to significantly reduced expectations on that side of the business over the course of the next couple years.
“On top of that, the fact that there's no guidance in the press release likely has people concerned about the achievability of people's full year expectations.
“Growth is clearly slowing on both the user and revenue basis, and without guidance to make people believe it's growing, you have a large part of investor fear.”
HERMAN LEUNG, ANALYST, SUSQUEHANNA FINANCIAL
“Advertising revenue came in a little better than expected.
“Payments were lower, but that's expected given what happened with Zynga. All in, I thought it was better than feared, but not better than expected.
“There was no guidance provided so the Street was a little irked and annoyed and that's part of why that stock is trading down.”
BEN SCHACTER, ANALYST, MACQUARIE
“The initial reaction is that the top line is pretty good. I don't think there's anything too shocking here. Advertising was good. There's no guidance here, in the release, so we're going to have to wait for that.”
MICHAEL MATOUSEK, SENIOR TRADER AT U.S. GLOBAL INVESTORS INC, WHICH MANAGES ABOUT $3 BILLION IN SAN ANTONIO
“They beat, but the Street was looking for more and that's why I think shares turned lower after an initial bounce.
“The big question with the stock is how it will monetize its billion or so users. A lot of people think they can't convert those users to money.
“The stock looks weak on a technical basis, and people could step in tomorrow when it breaks under $26, but it doesn't look good with this new information out there. I don't want to say the story is broken, but the story is kind of broken.”
DANIEL ERNST, ANALYST, HUDSON SQUARE RESEARCH
“It was an OK quarter. Numbers were beneath most of the Street.
“It was a decent quarter. I think people's real fear was it would fall off a cliff: it didn't. They've got a real business there, it's just not growing as fast as it used to.”
JORDAN ROHAN, ANALYST, STIFEL NICOLAUS
“Profit margins in the second quarter were very, very strong but the company's guidance implies additional spending in the third quarter. They're spending aggressively, perhaps on subsidies and advertising related to Kindle products.
“It's not clear from the numbers that the macro(economy) really affected Amazon. Many people view Amazon as the online version of Walmart, often being the low cost or low price provider of important and necessary goods and services, and it's that type of retailer will tend to see its business hold up really well in an otherwise relatively tough economic environment.”
KERRY RICE, ANALYST, NEEDHAM & CO
“The bottom line is below consensus but better than what we were expecting certainly; so they ended up coming above. But the real story here is around guidance – it was a little bit light from what people were expecting, and the bottom line much lower than what people would have expected.
“I don't know that we can say they are investing or spending too much. It's certainly more than people expected.
“A common theme for Amazon is they're going to spend to build the infrastructure and capacity to deliver the products and services to the consumer that they feel the consumer wants. As long as they grow in the high 20s to 30-percent range year over year, they will continue to spend like that.
“They've made a lot of bilateral agreements with states on the collection of sales tax as part of many of those deals they agreed to build distribution centers.
“So those distribution centers are going to cost $50 million and up. That adds a tremendous amount of cost. And I would assume, if the federal government finally passes a national collection of sales tax, then maybe they wouldn't make these bilateral centers and give up distribution centers everywhere.
“However, there has been tremendous amount of chatter on same-day deliveries, which would require them to build a lot more distribution centers.”
VICTOR ANTHONY, ANALYST, TOPEKA CAPITAL MARKETS
The outlook for the third quarter “was a bit disappointing.
“I am concerned about the margins which is, you know, pretty thin.
“Amazon just continues to spend on driving growth, taking share in e-commerce, building out the Kindle devices and expanding into Amazon Web services as well.
“Right now, there are in investment phase. I see them really coming out of that in 2013.”
Publish date: July 27, 2012 2:37 pm| Modified date: December 18, 2013 10:57 pm