Instant view: Amazon results beat Street, margins wane

Markets Reuters

LOS ANGELES (Reuters) - Amazon.com Inc reported a dip in earnings but its revenue forecast raced past Wall Street's expectations, propelling its shares higher in after-hours trade.

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Commentary:

SCOTT TILGHMAN, ANALYST, CARIS & CO

"Very strong topline growth, even backing out the favorable impact of currency. Operating income for the quarter did look a little bit light, down about 10 percent versus expectations, but some below-the-line type items helped offset that.

"Strong topline with costs offsetting that as the company continues to expand its infrastructure and add content, etc.

"Very strong revenue guidance, the low point of the guidance range is where consensus expectations are now, so revenues are basically being pushed higher. Operating income for third quarter is a bit light, caught almost half of where most of us expected it to be, so I think that's reflective of some of the spending that's taken place, perhaps almost pushed to third quarter from second quarter.

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"It's difficult to tell but we think we're nearing the end of the investment cycle because the company will want to have most of its expansion in place in advance of the holiday season."

SCOT WINGO, CEO, CHANNELADVISOR

"It was a very strong quarter.

"They really blew away expectations. Revenue was way above where most people were at.

"Amazon's formula of low-cost shipping, massive selection and great consumer experience continues to resonate."

DAN GEIMAN, ANALYST, MCADAMS WRIGHT RAGEN

"If you look at top-line growth it was extremely strong. At this point it's a question of how long the company is going to continue to invest at their current levels. Presuming these investments don't go on forever, earnings should grow going forward.

"The stock jump you're seeing is based on the revenue growth and it will be interesting to see what management has to say about these cost increases and the degree to which they're going to go on."

COLIN GILLIS, ANALYST, BGC PARTNERS

"The important thing here is this company is only generating minimal profit, and their operating income guidance continues to be low.

"The revenue number is nice but the leverage is not there. Margins continue to decline."

COLIN SEBASTIAN, ANALYST, R W BAIRD

"Very good second-quarter results, above our expectations.

"Top line growth continues to be very robust. In terms of the outlook, we're seeing ongoing constrained margin, as the company spends to build out capacity. and that might be the one wrinkle here in an otherwise very strong report."

(Reporting by Eunju Lie in New York and Noel Randewich in San Francisco)