Online retailer Amazon.com, Inc.(NASDAQ:AMZN), which
is due to report its third quarter results on October 25, is expected to lose
$0.08 a share, on revenues of $13.92 billion, Jiang Zhang said, writing in the
portal seekingalpha.com.
For the fourth quarter the company is expected to
forecast revenues at $22.84 billion.
The company has been investing a lot on its fulfilment
centres and this is expected to continue. This s what is putting a downward
pressure on its operating margins and Zhang said that the state of affairs will
play out for a couple of more quarters before the investments will start
showing a positive impact on the margins.
"Current investment in fulfilment will be a
long-term positive for Amazon in that it will eventually reduce airfreight cost
as more items are fulfilled by ground transportation, paving the way for margin
expansion. I note that Amazon's net shipping cost has declined from $935
million (5.4% of net revenue) in 4Q11 to $585 million (4.6% of net revenue) in
2Q12," Zhang said.
In the second quarter Amazon had recorded a 32 percent
rise in revenues on brisk sales of electronic and general merchandise and gross
margin saw an uptick of 198 basis points.
Amazon's fourth quarter guidance will be keenly
watched out for especially as it is supposed to start selling its new Kindle
Fire tablets in early November.
The tablets
will get competition from Apple's so-called iPad Mini that is expected to be
launched towards late October. Amazon will have to factor in this competition
and its own estimates of its sales.
It can also face competition from Google's Nexus 7
tablet that has been slowly gaining in popularity and Microsoft's Surface
tablet.
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