Amazon.com
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Buy, Sell or Hold: The Smart Money is Selling Amazon.com
I love the super deals that I get from Amazon.com (NASDAQ: AMZN). They always seem to beat the brick-and-mortar stores and I get two day-delivery for free.
It's no wonder to me that the online retail giant has ranked at the top of Foresee's E-Retailer Consumer Satisfaction index for eight straight years.
What I do have doubts about is Amazon's share price. It continues to make new highs while the company's core business is slowing and its new "growth" businesses aren't all they are cracked up to be.
With a P/E that has now reached astronomical levels, here's why the only money I'll be giving to Amazon will be what I spend on its merchandise.
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Why AMZN Stock is Soaring
Amazon.com Inc. (Nasdaq: AMZN) stock is up more than 15% in midday trading, after an earnings report that predicted slowing growth and profits in Q3. So why are investors interested in a stock that will make less money - and may even post a loss?
Money Morning's Chief Investment Strategist Keith Fitz-Gerald joined Fox Business' "Varney & Co." Friday to talk about the value in Amazon.com. Keith explained how Amazon.com's Q3 outlook isn't a bad thing.
Keith also shared a stock that he sees outperforming in this economy, and talked about how the GDP numbers highlight the "mess" Washington has created for the U.S. economy.
Watch this accompanying video for Keith's full analysis.
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Amazon.com Inc (Nasdaq: AMZN): Investors Flee on Weak Q3 Outlook
Amazon.com Inc. (Nasdaq: AMZN) today (Thursday) reported a fiscal second-quarter profit of $7 million, or a penny a share, on revenue of $12.83 billion - very close to what was expected, but still a miss.
Analysts forecast a sharp increase in revenue, estimating earnings per share of two cents on revenue of $12.92 billion. Sales were up 29%., but net income fell 96% from the same period a year ago.
Weighing on its bottom line was investments in new distribution facilities, a number closely watched because Amazon has a history of reporting strong revenue. The company has been plowing copious amounts of its earnings into building a distribution network to help it more efficiently grow its business long term.
After reporting better-than-expected first-quarter numbers, 41 cents on revenue of $9.91 billion, the Seattle, WA.-based company had expected revenue to fall in the range of $11.9 billion and $13.3 billion.
Pushing the stock down as much as 7% in after-hours trading was the Q3 guidance.
Amazon.com predicted a Q3 operating loss of between $50 million and $350 million, versus Wall Street estimates of income of $119.6 million. Amazon said it expects Q3 revenue of $12.9 to $14.3 billion, which includes the Wall Street estimate of $14.1 billion.
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The Bright Future for Cloud Computing is Becoming Much Clearer
The cloud computing industry has yet to fully take off, but for an indication of its potential, look at the players getting involved.
Microsoft Corp. (Nasdaq: MSFT), Hewlett-Packard Co. (NYSE: HPQ), Oracle Corp. (Nasdaq: ORCL), Google Inc. (Nasdaq: GOOG), and Amazon.com Inc. (Nasdaq: AMZN) - the biggest names in the tech sector - are all racing to take the lead in this burgeoning industry.
So what's all of the excitement about?
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Only the Strongest Retailers Will Survive in 2010 as U.S. Consumers Continue to Battle Back
The early returns on the 2009 holiday shopping season show a minor gain over last year's abysmal retail sales, and next year will affirm that retailers are successfully adapting to a consumer environment that's very different from years past.
However, 2010 will be difficult for retailers as they contend with high unemployment, tight credit, and aggressive competition.
Retail sales gained 3.6% year-on-year from Nov. 1 through Dec. 24, SpendingPulse, a unit of MasterCard Advisors (NYSE: MA) said earlier this week. But an extra day between Thanksgiving and Christmas this year may have skewed the data anywhere from 2% to 4%, SpendingPulse said. Sales in the same period last year declined 2.3% as consumers reeled from the financial meltdown that occurred in the fall.
"The latest holiday shopping season wasn't a rip-roaring success, but at least it met or slightly exceeded expectations," John Lonski, chief economist of Moody's Capital Markets Research Group (NYSE: MCO) told The Associated Press. "Consumer spending is indeed in a recovery mode, which brightens prospects for 2010." -
Shoppers Expected to Bounce Back After Snow Storm Wipes Out "Super Saturday"
After a massive snowstorm blew away "Super Saturday," last-minute shoppers are expected to make up for the lost weekend and keep retailers' holiday sales even with forecasts, the National Retail Federation (NRF) announced yesterday (Monday).
The trade group stuck to its previous projections for a 1% drop from last year's levels, saying the weather wasn't bad enough to deter shoppers from bouncing back in the last days before Christmas.
"There are more than enough shopping days to make up any challenges due to weather in the east," Matt Rubel, chief executive officer of Collective Brands Inc. (NYSE: PSS), said in an e-mail to Bloomberg News. Kansas-based Collective Brands is the owner of the Stride Rite and Payless ShoeSource chains.
