Amazon results post market in the US. OK, normally we end like this, but let us start like this, the stock is up 6.36 percent in the post market session to an all time high of 227.8 Dollars. Let us engage in some copy and pasting here in order to speed things up, taken from the results release (Amazon.com Announces Second Quarter Sales up 51% to $9.91 Billion) some pieces:
"Net sales increased 51% to $9.91 billion in the second quarter, compared with $6.57 billion in second quarter 2010."
"Net income decreased 8% to $191 million in the second quarter, or $0.41 per diluted share, compared with net income of $207 million, or $0.45 per diluted share, in second quarter 2010."
OK, I hear your concerns, the trailing price to earnings multiple at the closing price yesterday is 90 times. Don't faint. Forward to next year, 2012, we are looking at around 55 times earnings (that is at the pre market price). So, there is a big unwind underway here, because earnings are ramping quickly. And fast forward to 2013 and the price to earnings multiple is comfortably around 25 times earnings. So, the stock might have many detractors (folks who say, hell no, this is too expensive) but I like to think that the market almost always gets the rating (right now) just right.
OK, what exciting product pipeline (existing and future) do they have on the go at Amazon? Other than the obvious really cheap Amazon Kindle, 139 US Dollars seems a like a steal really. The new textbook service where you hire the book with a limited time on your Kindle seems really cool. And let us be honest, anyone with a tablet will have the Kindle application, so it could be fair to say, like Microsoft cornered the PC software market, Amazon might well corner (possibly already have) the online book market. And physical books. The US Kindle store has nearly 1 million books, and 80 percent of them cost less than 10 Dollars a pop.
Plus also all the existing product offerings in different geographies, that is seemingly a win, because the product of course has been tried and tested in the core market. Not to say that we all have American tendencies, but certainly down here I think we do. Amazon Cloud looks like a big growth area, streaming old TV series from CBS seems like a great idea (the DVD really is dead chaps, just like the audio cassette and video cassette) and one that is a particular favourite, MyHabit.com seems cool. Basically, inside of the US you can sign up for a US account and buy boutique brands with almost a 60 percent discount. I signed in, seems like a bit Groupon to me. Yes, there I said it.
Very innovative, the Kindle was obviously a huge leap forward for them, and the company continues to innovate. I suspect that they are really going to change the way that people view retail around the world, they have succeeded in changing the way that we view books. The distribution network I would say has got smaller in the US with the news that the US postal service are cutting thousands of rural outlets, 3700 actually. 12 percent of the lot.
U.S. Postal Service Says It May Shutter 3,700 Post Offices. Perhaps Washington should close. Sign of the times I guess. We continue to buy Amazon, knowing that they are eating their competitors lunches. I mean all meals.