Amazon Keeps Analysts Guessing on Quarterly Results

Amazon is famously tight-lipped about its plans, so it’s hard to predict how it will perform each quarter. Analysts always ask: Did the e-commerce giant choose to reinvest its profits, or did it let revenue trickle down to the bottom line?

“Visibility into Amazon’s quarterly performance is notorious,” wrote Youssef Squali, an analyst with Cantor Fitzgerald in a note to investors. Citi’s Mark Mahaney similarly wrote: “Key (as always) will be the company’s operating income outlook, which we continue to view as largely a discretionary — not a structural — call by Amazon management and thus very hard to predict.”

Besides keeping analysts out of the loop on its plans, another reason why it’s so hard to put a finger on Amazon’s spending plans is because it is investing in everything under the sun. Some of the categories that have caught Jeff Bezos’s fancy of late are the Kindle Fire, video streaming and apparel. That’s not to mention the hard costs associated with building out more fulfillment centers.

Wall Street expectations for the quarter include a net loss of eight cents a share on revenue of $13.9 billion. Amazon’s own forecast includes sales between $12.9 billion and $14.3 billion, representing growth between 19 percent and 31 percent compared with the year-ago period. It is also expecting an operating loss between $350 million and $50 million, down from operating income of $79 million a year ago.

If Amazon’s results were as easy as looking at overall e-commerce spending, its performance would be a no-brainer. U.S. online sales in Q3 were up 15 percent year over year, according to comScore.

But it’s more complicated than that. Earlier this month, Bezos finally admitted that Amazon sells its hardware at cost, meaning that it will make more money after the new Kindle Paperwhite or the new Kindle Fire HD are in the hands of the customer. The strategy is hard for analysts to wrap their minds around, given that Apple has the exact opposite strategy. The iPad and iPhone maker, which is also reporting results today, is expected to report a profit of $8.91 a share on sales of $36.27 billion.

Amazon will release its numbers sometime after 1 pm PT today, with an earnings call to follow at 2 pm. Join us back here for coverage.