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Amazon.com Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 26, 2012 06:02AM

Amazon.com Inc. (AMZN) filed Quarterly Report for the period ended 2012-09-30. Amazon.com Inc has a market cap of $108.5 billion; its shares were traded at around $207.25 with a P/E ratio of 296.3 and P/S ratio of 2.3. Amazon.com Inc had an annual average earning growth of 25.1% over the past 5 years.



Highlight of Business Operations:

Cash provided by (used in) investing activities corresponds with capital expenditures, including leasehold improvements, internal-use software and website development costs, cash outlays for acquisitions, investments in other companies and intellectual property rights, and purchases, sales, and maturities of marketable securities. Cash provided by (used in) investing activities was $(369) million and $100 million for Q3 2012 and Q3 2011, and $(513) million and $(461) million for the nine months ended September 30, 2012 and 2011, with the variability caused primarily by purchases, maturities, and sales of marketable securities and other investments, increased capital expenditures, and increases in cash paid for acquisitions. Capital expenditures were $716 million and $529 million during Q3 2012 and Q3 2011, and $1.8 billion and $1.3 billion for the nine months ended September 30, 2012 and 2011, with the increases primarily reflecting additional investments in support of continued business growth due to investments in technology infrastructure, including AWS, and additional capacity to support our fulfillment operations. We expect this trend to continue over time. Capital expenditures included $109 million and $71 million for internal-use software and website development during Q3 2012 and Q3 2011, and $276 million and $186 million for the nine months ended September 30, 2012 and 2011. Stock-based compensation capitalized for internal-use software and website development costs does not affect cash flows. We made cash payments, net of acquired cash, related to acquisition and other investment activity of $37 million and $48 million during Q3 2012 and Q3 2011, and $711 million and $656 million during the nine months ended September 30, 2012 and 2011.

We recorded net tax provisions of $83 million and $67 million in Q3 2012 and Q3 2011, and $234 million and $205 million for the nine months ended September 30, 2012 and 2011. A majority of this provision is non-cash. We have current tax benefits and net operating losses relating to excess stock-based compensation deductions that are being utilized to reduce our U.S. taxable income. Except as required under U.S. tax law, we do not provide for U.S. taxes on our undistributed earnings of foreign subsidiaries that have not been previously taxed since we intend to invest such undistributed earnings indefinitely outside of the U.S. Cash taxes paid (net of refunds) were $21 million and $12 million for Q3 2012 and Q3 2011, and $60 million and $18 million for the nine months ended September 30, 2012 and 2011. As of December 31, 2011, our federal net operating loss carryforward was approximately $384 million and we had approximately $273 million of federal tax credits potentially available to offset future tax liabilities. Once we utilize federal net operating losses and tax credits, we expect cash paid for taxes to significantly increase. We endeavor to optimize our global taxes on a cash basis, rather than on a financial reporting basis.

Sales increased 27% in Q3 2012 and 30% for the nine months ended September 30, 2012, compared to the comparable prior year periods. Changes in currency exchange rates impacted net sales by $(348) million for Q3 2012 and $371 million for Q3 2011, and by $(676) million and $992 million for the nine months ended September 30, 2012 and 2011. For a discussion of the effect on sales growth of exchange rates, see “Effect of Exchange Rates” below.

International sales grew 20% in Q3 2012 and 24% for the nine months ended September 30, 2012, compared to the comparable prior year periods. The sales growth primarily reflects increased unit sales, partially offset by a higher percentage of sales by marketplace sellers. Increased unit sales were driven largely by our continued efforts to reduce prices for our customers, including from our shipping offers, by sales in faster growing categories such as electronics and other general merchandise, by increased in-stock inventory availability, and by increased selection of product offerings. Additionally, changes in currency exchange rates impacted International net sales by $(347) million for Q3 2012 and by $367 million for Q3 2011, and $(670) million and $981 million for the nine months ended September 30, 2012 and 2011. We expect that, over time, our International segment will represent 50% or more of our consolidated net sales.

Our interest income was $10 million and $16 million during Q3 2012 and Q3 2011, and $32 million and $47 million for the nine months ended September 30, 2012 and 2011. We generally invest our excess cash in investment grade short- to intermediate-term fixed income securities and AAA-rated money market funds. Our interest income corresponds with the average balance of invested funds and the prevailing rates we are earning on them, which vary depending on the geographies and currencies in which they are invested.

Read the The complete Report



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