October 22, 2008 / 8:29 PM / 11 years ago

INSTANT VIEW: Amazon holiday outlook disappoints

SAN FRANCISCO (Reuters) - Amazon.com Inc on Wednesday gave a revenue forecast for the holiday quarter that fell short of Wall Street expectations, and its shares fell 12 percent.

COMMENTARY:

BRIAN PITZ, SENIOR INTERNET ANALYST, BANK OF AMERICA IN NEW

YORK

“The U.S. currency has gotten stronger, and since a fair amount of their revenues originate from international, essentially they have less of a tailwind to their international revenues when the dollar gets stronger. They’re not getting the benefits of their international revenue.”

“In the past couple of quarters, international has been about 47 percent or so of their total revenue.”

MANAGEMENT IN BEDFORD HILLS, NY

“The fourth quarter is the problem. They really lowered revenue and operating income guidance. You can drive a truck through the revenue outlook it’s so wide. Conservative is an understatement. Clearly they’re expecting a weak holiday season, or at least preparing for that. Hopefully those estimates can be exceeded. This management has always been conservative with guidance, they’ve always looked at what could go wrong with sales, despite the fact that they’re taking market share and growing. Not only is e-commerce growing, but they’re taking e-commerce share.

“I don’t think anything is broken at Amazon, and there are no major issues. They’re just expecting a weak fourth quarter. Currency will also be a drag.

“The stock is down a lot right now, over 12 percent, but this is a very volatile market, I think Amazon will recover some of the ground it’s losing in the after-market.”

DAN GEIMAN, ANALYST, MCADAMS WRIGHT RAGEN

“Clearly they’re showing a bit of deceleration, a low revenue guidance and seeing the impacts of a slowing economy and reduced consumer participation. But they’re still pretty robust in a very difficult time.

“They’ve been impacted adversely by the stronger dollar. Earlier they were able to do better because of their overseas sales, but much of that benefit is lost because of the stronger dollar.

“The holiday season might be little better for online retailers than for others retailers, even though it will be less robust in general this holiday season.”

HAMED KHORSAND, ANALYST, BWS FINANCIAL IN LOS ANGELES

“It seems as though the invincibility might have a crack in it with the guidance that the company provided, the invincibility of the brand. Amazon is probably one of the most recognized e-commerce brands on the Internet.”

“This is really the first test for Amazon going into a soft economic period, especially on a global perspective. The last time that there was any kind of economic slowdown, Amazon was still ramping up from a sales perspective and the Internet itself was still ramping up back in ‘01, ‘02. So there wasn’t any way to track the effect the slumping economy had on the company. This is the first test.”

JEFFREY LINDSAY, ANALYST, SANFORD C. BERNSTEIN

“They’ve come in line with the consensus. What people are reacting to is the revenue guidance which has gone down.

“They are definitely signaling much worse returns in the fourth quarter.

“This is further confirmation that the economic downturn is much more pervasive than was earlier thought. Online retailers were thought to be immune to it, but this is an indication that that is far from true.”

Reporting by Alex Dobuzinskis and Syantani Chatterjee in Los Angeles, Ryan Vlastelica in New York

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