Earnings: Netflix, Amazon, AmEx

(Updated) Here are some of the companies releasing earnings after the bell yesterday:


Proving its resilience amid the crisis, Netflix’s increased subscriber base and higher margins catapulted it to a 22% income growth for the second quarter.  With earnings of $32.4m or $0.54 a share vs. last year’s 42 cents, the company is proving it is able to stave off increasing competition from other online media providers such as Hulu.

Netflix’s revenue also increased by 21% to $408.5m.  Both the top and bottom lines surpassed analysts’ expectation of a per share earnings of 50 cents as well as revenue of $410m.

The company’s ability to reduce costs such as subscriber-acquisition costs helped its gross margin to grow from 31.8% to 34.1%.

Subscriber base grew by 26% from last year to 10.6m.

See the entire earnings release HERE.

amazonlogoOne of my favorite stores, Amazon, yesterday posted higher revenues for the second quarter, while earnings were a miss from both last year and analysts’ expectation.  Here are the numbers: sales went up 14% to $4.65bn from $4.06bn last year while profit fell 10% to $142m or an EPS of 32 cents, versus last year’s $158 or $0.37.  The bottomline was affected by charges from a legal settlement with Toys R Us and weakness in high-margin goods such as videogames.  CFO Tom Szkutak also said sales of books and music were weak.

On to forecasts: profit would be between $120 million and $210 million while it predicts net sales to grow by between 11% and 23%, or between $4.75 billion and $5.25 billion.

Little was said about the Kindle. It was only mentioned twice – one that the price was cut and two, that it’s the #1 bestseller in the site’s electronics division.

In terms of growth, the company reported as follows:

International segment sales, representing the Company’s U.K., German, Japanese, French and Chinese sites, were $2.20 billion, up 16% from second quarter 2008. It would have grown 28% if not for the negative impacts of forex.

Worldwide Media sales grew 1% to $2.44 billion, 7% if unfavorable impact from forex were ignored.

Furthermore, the 89% growth in its free cash flow shows the company is cash-abundant and it comes as no surprise that it is making an acquisition of Zappos, with a $40m cash to be given out to the private firm.

Amazon’s release can be found HERE.

AXPWith continued drop in consumer spending which the company reported to be at 16%, card issuer American Express saw a decline of 48% on its net income to $337 million, or nine cents a share, down from $653 million, or 56 cents a share last year, following bigger write offs.  One helpful factor was the firm’s expenses which was down 16%.

Revenue was lower by 18%, which also failed to meet expectations – $6.1bn vs. $6.3bn.

For Q2, the write off was 1.5% higher from Q1’s 8.5% and even more from the 5.3% same period of last year. What helped however was a reduction in cardholders who are behind their payments.  The 5.1% ratio for Q1 went down to 4.4% for Q2.

A look further into the report, we find that the card issuer’s US segment incurred a loss of $200m vs. a profit from last year yet the provision for losses have decreased by 22% from $1.5bn to $1.2bn.  But that is also due to lower loan receivables and higher net write-offs.  On the other hand, the international card segment of the firm has seen a decrease in earnings, which are actually still positive.  It had a worse provision for write offs after it grew 25%.

In a statement, Chairman and CEO Kenneth I. Chenault said: “Although it is still too early to point to any sure signs of an economic recovery, the number of cardmembers who are falling behind in their payments, the volume of bankruptcy filings and the level of loan write-offs were better than we had expected.”

Read the entire AXP earnings release HERE.


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