Thursday, July 23, 2009

You Can Run But You Can't Hide

More thinking - I am a glutton for punishment.

Amazon reported after the bell. Down over 6% now. No worries, just need to over pay for another company.

Anyway - lets look at some more math.

In the press release they lead with free cash flow (you know they are in trouble if a "growth" company leads their press release with free cash flow) proudly proclaiming they produced 1.54 billion in free cash flow. That would mean 22X free cash flow. Expensive in anyone's book but especially expensive for what comes next.

Net sales grew 14% yoy but down 4.9% from Q1!!! This for a company that is trading 60X trailing earnings and 45X supposed "forward" earnings.

Oh it gets better. Operating earnings down 27% yoy. There is some noise in the operating earnings but it is a wash. $51 million one time loss but also a $53 million one time gain. Also some currency issues. You also had the earnings down 34% from Q1.

Then you have other "highlights" - Reduction of price for the Kindle, Customers saved $900 million on free shipping offers, and something about some new MP3 service in France (boy that sounds promising).

Then you get to guidance. Net sales between $4.75 billion and $5.25 billion. Talk about a wide range. Then the question has to be asked, does that include Zappos? Operating income between $120 million and $210 million. So will we see headlines, "Amazon raises guidance to $210 million?" Then three months later when they report earnings of $150 million the new headline reads "Amazon beats guidance of $110 million."

Other stuff is going on also. Microsoft, ugly earnings. Down 8%. American Express down 4% and now as I wrap up this post, Amazon down 9.5%.

I am willing to guess, though who knows, that the winning streak for the NASDAQ will finish at 11 days. Tomorrow we actually may see red.

I am about to hit the road. Houston tonight and then wedding dinner rehearsal tomorrow and wedding on Saturday (not my own just to be clear). I may post I may not. If not, have a great weekend.

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