Jul. 25, 2007

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At the close of the markets today, Amazon.com posted quarterly net profit that shot up an unexpected 250 percent, as sales in its market increased dramatically.

Amazon's strong earnings sent the price of its stock up almost 13 percent after-hours.

The company also raised its forecast for full-year sales. Bernstein Research analyst Jeffrey Lindsay was quoted as saying "it's a blow-out second quarter. It's an amazing performance. A lot of that growth seems to have come in the U.S., which is particularly surprising since that's considered Amazon's most mature market."

Amazon's net income in the second quarter rose to $78 million, or 19 cents per share, compared with $22 million, or 5 cents a share, for the corresponding period of 2006.

Revenue rose 35 percent to $2.89 billion in the second quarter, which is seasonally the slowest.

In North America, net sales rose 38 percent, Amazon said. Earnings of 19 cents per share topped the Wall Street target of 16 cents, and revenue also beat the $2.8 billion average expectation, according to Reuters Estimates.

Lindsay added that electronics and general merchandise posted an impressive 55 percent gain, which he called "unusually good." He said results from North America were the best he had seen in several years. Amazon actually said North American growth was the highest in more than six years.

For the third quarter, the company said it expects net sales in a range of $3 billion to $3.18 billion, with operating income in a range of $75 million to $110 million.

On average, analysts have been expecting third-quarter revenue of $3.01 billion, according to Reuters Estimates.

The company raised its full-year sales forecast to a range of $13.8 billion to $14.3 billion.

Previously, the company said it expected a range of $13.4 billion to $14.0 billion. Amazon shares have surged since last quarter's results showed improved profit margins and pared-back spending.

Bullish investors, jumping on signals that investments in technology and content might be beginning to pay off, have pushed Amazon's price up more than 60 percent as of Monday's close since first-quarter earnings were announced in April 2007.

Amazon's stock has more than doubled since year-ago results came out.

The company is now valued well above major Internet players as well as brick-and-mortar retailers. Amazon shares, as of Monday's close, traded at 52 times 2008 expected earnings, compared with 21 times at eBay, 46 times at Yahoo and 14 times at Wal-Mart Stores.

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Source: CNN Money

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