AMZN

Amazon Fails to Turn a Profit

by

Thursday afternoon, e-commerce heavyweight Amazon (click ticker for report: ) reported mediocre second quarter results. Revenue increased 22% year-over-year to $15.7 billion, falling short of consensus estimates. Earnings per share swung to a loss of $0.02, which was also worse than consensus expectations. Free cash flow for the quarter was surprisingly positive at $25 million, equal to less than 1% of revenue. Amazon remains firmly entrenched in “investment” mode, as the firm spent well over $800 million on internal investments during the second quarter. The company specifically cites spending on fulfillment centers and server infrastructure as well as continued investment in the Amazon Prime Instant stream. Within the not-so-distant future, we can envision an Amazon where same-day shipping is the … Read more

eBay’s “Weak” Guidance Doesn’t Change the Phenomenal Story

by

E-commerce giant and Best Ideas Newsletter portfolio holding eBay (click ticker for report: ) announced solid second quarter results after the closing bell Wednesday. Revenue jumped 14% year-over-year to $3.9 billion, roughly in-line with consensus expectations. Earnings were also in-line with consensus estimates, growing 13% year-over-year to $0.63 per share on a non-GAAP basis. Free cash flow for the quarter was wonderful at $658 million, approximately 17% of revenue. Enabled commerce volume, a metric specific to eBay, registered $51 billion, a 21% increase over the same period a year ago. Image Source: EBAY Q2 FY2013 Earnings Presentation PayPal continued to be a stellar performer for eBay, with payments revenue surging 21% year-over-year to $1.475 billion, driven largely by international growth, … Read more

Amazon’s Expansion Knows No Bounds

by

On Tuesday, we received a variety of information about Amazon’s (click ticker for report: ) expansion into different product lines. The company is looking to expand its AmazonFresh same-day grocery delivery service and could enter as many as 40 markets this year. Additionally, the firm entered into the highest streaming content contract ever, purchasing the rights to stream over 4,000 episodes of Viacom (click ticker for report: ) TV shows. Let’s dig into the details. AmazonFresh For years, people have speculated that the end-game for Amazon was to build so many warehouses that it could effectively offer same-day shipping on any product and compete with brick-and-mortar shops on the basis of time. Thus, the expansion of AmazonFresh comes as little … Read more

Amazon’s Story Doesn’t Change

by

Online mega-retailer Amazon (click ticker for report: ) reported strong first quarter results. Revenue was slightly worse than consensus estimates anticipated, growing 22% year-over-year to $16 billion. Conversely, earnings per share exceeded consensus expectations, but still fell 35% year-over-year to $0.18. Amazon reports a metric of trailing twelve months (TTM) free cash flow, which declined 85% sequentially to $177 million as the firm invests heavily in fulfillment centers and distribution. Amazon’s earnings guidance was relatively weak, with the firm anticipating it will post operating income of negative $340 million to positive $10 million in the second quarter—meaning the company isn’t likely to come anywhere near the consensus expectation of $0.22 per share. Revenue is anticipated to fall between $14.9 billion … Read more

Don’t Get Too Floored By Lumber Liquidators’ Performance

by

Over the past year, one of the more amazing performers has been hardwood floor supplier Lumber Liquidators (click ticker for report: ). Shares have steadily climbed a whopping 185% over the past year and are up 55% year-to-date. However, we do not believe such robust performance is likely to continue. Fundamentally, little is wrong with the company’s recent performance. In fact, Lumber Liquidators is benefitting from a strong rebound in the US housing market. Flooring is one of the more obvious features of a house, making it an obvious area to improve from almost all aspects of ownership, whether it be selling, buying, or renting. With hardwood floors still in vogue, the firm is capitalizing on this demand, experiencing a … Read more

Shares of Baidu Are Just Too Cheap

by

Valuations for internet technology companies are literally all over the place. On one end of the spectrum sits LinkedIn (click ticker for report: ) and Amazon (click ticker for report: )—fast growing firms with sky-high PE multiples and tremendous credit given to the long-run. On the other end, we have Apple (click ticker for report: ) generating fantastic amounts of free cash flow, and trading with a single-digits forward PE. Chinese search giant Baidu (click ticker for report: ) falls closer to Apple, and we think shares look incredibly cheap at current levels. Let’s take a closer look at the search giant. Valuation Baidu’s valuation on a discounted cash flow basis looks extremely reasonable. We estimate shares to be worth … Read more

The E-Commerce War Between eBay and Amazon Heats Up

by

In order to help drive more sellers on to its platform, Best Ideas Newsletter holding eBay (click ticker for report: ) announced new, less complicated fee structures. The firm already charged lower fees than Amazon (click ticker for report: ), but the new structure gives greater transparency to sellers. The move is very positive, in our view, as we think it can help drive a stronger network of fixed price sellers to eBay. After becoming associated with auctions since its inception, eBay is in the process of becoming a destination for buyers of everything, much like Amazon has done successfully over the past several years. While Amazon may look slightly more attractive in the near-term because more buyers are on … Read more

Who’s Amazon’s Next Victim?

by

An interesting white paper was released recently, analyzing how Amazon (click ticker for report: ) is altering the retail landscape. The paper itself had some interesting insights, but our favorite takeaway of Placed’s work was the top ten companies at risk. 1.    Bed Bath and Beyond (click ticker for report: ) 2.    PetSmart (click ticker for report: ) 3.    Toys ‘R Us 4.    Best Buy (click ticker for report: ) 5.    Sears (click ticker for report: ) 6.    Barnes & Noble (BKS) 7.    Kohl’s (click ticker for report: ) 8.    Target (click ticker for report: ) 9.    Costco (click ticker for report: ) 10. JC Penney (click ticker for report: ) For the most part, we agree with the list, … Read more

RadioShack’s Slide Continues; Cash Flow is Terrible

by

Electronics retailer RadioShack (click ticker for report: ) reported a terrible fourth quarter Tuesday morning. Sales fell 7% year-over-year to $1.3 billion, below already tempered consensus estimates. Earnings per share were a disaster, falling from $0.12 in the fourth quarter of 2011 to a loss of $0.63 in the fourth quarter of 2012—though this number was negatively impacted by a $67 million non-cash charge. We’re steering clear of shares in the portfolio of our Best Ideas Newsletter. Consistent with what we’ve seen all year, the company’s core business continues to deteriorate, with same-store sales dropping 7% during the fourth quarter. The firm also announced earlier in the year that its mobile-store relationship with Target (click ticker for report: ) has … Read more