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A box from Amazon.com is pictured on the porch of a house in Golden, Colorado July 23, 2008.
Credit: Reuters/Rick Wilking
By Alistair Barr
Thu Apr 26, 2012 5:32pm EDT
(Reuters) - Amazon.com Inc's quarterly earnings beat Wall Street's most bullish expectations as the world's largest Internet retailer brought costs under control, sending its shares up almost 15 percent.
Investors cheered first-quarter earnings that came in several times above average forecasts, saying the Internet giant, which has been spending aggressively on expansion, is beginning to rein in expenses.
"The biggest concern has been margins. A lot of investors have been looking for the company to demonstrate that it could get leverage on all of these investments it's been making," said Caris & Co analyst Scott Tilghman.
The situation for Amazon is similar "to what we saw back in the 2004 to 2006 time frame when the company was making a lot of investments and margins got squeezed. Then in the years following, margins expanded and revenue accelerated. It looks like the company is in that position right now."
Amazon reported net income fell to $130 million or 28 cents per diluted share in the first quarter, versus $201 million or 44 cents a year ago. But that was far above the average Wall Street forecast for 7 cents a share.
First-quarter revenue of $13.18 billion, up 34 percent from a year earlier, was ahead of Wall Street estimates for $12.9 billion. Operating income was $192 million, compared with $322 million a year earlier.
Amazon shares rose to $225 in after-hours trading from a close of $195.99.
"We were expecting 15 cents EPS ... and we were probably the high end of the Street of where the margins were," said Evercore Partners analyst Ken Sena.
"You are starting from a very low point: modest improvement on a percentage basis. It looks pretty good. I think the margins have a long way to go, but I think at least to see them moving in the right direction is an encouraging sign."
(Editing by Phil Berlowitz)
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