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Amazon profit up, margins squeezed
Amazon.com on Wednesday issued quarterly earnings and full-year sales forecasts ahead of Wall Street targets, but profit margins declined in what one analyst called a disappointment.

Shares of the Internet retailer, which trade at a huge premium to peers, fell about 3.5 percent to $71.61 in after-hours trade.

Hamed Khorsand of BWS Financial noted that gross profit margins were down from a year ago and the previous quarter.

"That was disappointing," he said. "It seems there was a lot of promotions, discounting in the quarter." The operating income outlook "doesn't look too great," he added.

The fourth-quarter gross margin of 20.6 percent was below 21.3 percent a year earlier and 23.4 percent in the third quarter.

Net profit rose 112 percent to $207 million, or 48 cents per share, from $98 million, or 23 cents per share, a year ago. Sales rose 42 percent to $5.67 billion in the quarter.

Analysts, on average, had been expecting Seattle-based Amazon to post earnings of 47 cents per share on revenue of $5.36 billion, according to Reuters Estimates.

Operating income rose 38 percent to $271 million.

Amazon had been expecting quarterly net sales to range between $5.1 billion to $5.45 billion with operating income of $221 million to $291 million.

Amazon was one of the high-flying tech stocks in the latter half of 2007, but much of that gain was lost in a recent sector selloff on recession fears and disappointing forecasts from Apple, eBay, and Yahoo. Wall Street concerns center on how Amazon, the most popular Web e-commerce site behind eBay, will fare in a recession.

The company gave first-quarter and full-year 2008 sales targets that were higher than Wall Street expectations.
http://www.news.com/Amazon-profit-up,-margins-squeezed/2100-1030_3-6228472.html