AMZN misses estimates

[HenryTo]

Stock at a new 52-week low in after-hours trading:
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Amazon's net falls; sales rise in line
Stock falls more than 5% in late trading
By Bambi Francisco, MarketWatch
Last Update: 5:48 PM ET April 26, 2005

SAN FRANCISCO (MarketWatch) -- Amazon.com reported late Tuesday first-quarter net income fell 30%, even though revenue rose by more than a fifth, as soaring taxes and operating expenses offset higher sales of electronics and tools.

Amazon.com (AMZN: news, chart, profile) said it earned $78 million, or 18 cents a share, for the quarter ended March 31, compared to $111 million, or 26 cents, a year ago. The results included a tax expense of $56 million and a $26 million gain for an accounting change. In the year-earlier period, Amazon received a tax benefit of $2 million.

Analysts expected Amazon.com to earn 23 cents a share, according to analysts surveyed by Thomson First Call.

Amazon shares fell more than 5 percent to $30.95 in late trading after the results were released.

The company generated sales of $1.9 billion, up 24% from last year and in line with expectations. Excluding a foreign currency benefit, sales grew 22%. International sales grew 28%, faster than U.S. sales growth, and now contribute 45% of Amazon's total sales.

Even though it boosted sales, Amazon's operating expenses soared nearly 40 % as it relied on a new promotion, called Amazon Prime, that allows customers to get free two-day shipping for a yearly membership fee of $79.

"We're seeing especially heavy use of Amazon Prime in Electronics, Tools, Kitchen, and Health & Personal Care," said Jeff Bezos, founder and CEO of Amazon.com, in a release. "For $79 a year, Amazon Prime members get 'all-you-can-eat' free express shipping. Getting your items right away changes the way you use and think about Amazon.com."

For the second quarter, Amazon.com said it expects sales between $1.675 billion and $1.825 billion. For the full year, it added that it estimates sales between $8.175 billion and $8.675 billion.

Analysts currently expect Amazon to generate sales of $1.7 billion in the second quarter, and $8.4 billion for the full year.