Amazon: It's All About the Margins
Investors will also be looking for any mention of weakness in Europe. Amazon generates a healthy percentage of its revenue overseas, but with so many European countries mired in recession (Spain, Greece, Italy, U.K, to name a few), sales deceleration may put a black mark on the quarter.
J.P. Morgan analyst Doug Anmuth points to channel checks from ChannelAdvisor, comScore(SCOR) , and earnings from eBay(EBAY) and Google(GOOG) as indications that U.S. e-commerce may in fact be accelerating, despite concerns over Europe.
"ChannelAdvisor data suggests a significant deceleration in Amazon's 1Q SSS
Investors will be keen to hear any update Amazon has about its consumer electronics strategy, namely the Kindle Fire.
It's widely speculated that Amazon sells the Kindle Fire at breakeven or perhaps even a slight loss to drive traffic to its site, but there is little known about the growth of the device and its effect on margins. Bernstein analyst Carlos Kirjner notes a back-of-the-envelope estimate suggests that the Kindle Fire could positively impact first-quarter revenues by $300 million to $500 million, but it's dilutive to gross and operating margins. Kirjner rates Amazon shares "overweight" with a $239 price target.
Shares of Amazon are lower in Thursday trading, off 0.49% to $193.47.
Interested in more on Amazon? See TheStreet Ratings' report card for this stock.
--Written by Chris Ciaccia in New York
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