Lazard notes Amazon recently reported solid 17% growth in peak-day holiday orders, and a 44% increase in units shipped from the company's fulfillment centers, which they believe supports their view that Amazon will continue to gain share with a strong customer value proposition, broad product selection, and low prices.
However, they believe the cost of maintaining above-market growth will become evident in declining profit margins, and they are comfortable with their below consensus EPS estimates for 4Q and 2009.
Given the lack of visibility into consumer spending trends in the months and year ahead, they expect Amazon to provide a wide initial guidance range for 2009 revenues and operating income. While the shares are still down ~50% YTD, they believe the recent 40% appreciation in AMZN may not reflect a more challenging growth and profit outlook.
NY Times reports could book lovers finally be willing to switch from paper to pixels? For a decade, consumers mostly ignored electronic book devices, which were often hard to use and offered few popular items to read.
But this year, in part because of the popularity of Amazon.com's wireless Kindle device, the e-book has started to take hold. Although Amazon will not disclose sales figures, the Kindle has at least lived up to its name by creating broad interest in electronic books. Now it is out of stock and unavailable until February.
Analysts credit Oprah Winfrey, who praised the Kindle on her show in October, and blame Amazon for poor holiday planning. The shortage is providing an opening for Sony (SNE), which embarked on an intense publicity campaign for its Reader device during the gift-buying season. The stepped-up competition may represent a coming of age for the entire idea of reading longer texts on a portable digital device.
"The perception is that e-books have been around for 10 years and haven't done anything," said Steve Haber, president of Sony's digital reading division. "But it's happening now. This is really starting to take off." Sony's efforts have been overshadowed by Amazon's.
But this month it began a promotional blitz in airports, train stations and bookstores, with the ambitious goal of personally demonstrating the Reader to two million people by the end of the year.
The Wall Street Journal reports Wal-Mart (WMT) agreed Tuesday to pay up to $640 mln to settle 63 suits alleging it routinely underpaid employees around the country, ending years of legal battles over its treatment of workers. As a result of the agreements, each of which must be approved by a trial judge, the retailer said it would take a $250 mln after-tax charge during its fiscal fourth quarter ending Jan. 31. If approved, the settlements would close the majority of the long-running cases Wal-Mart faces on allegations that it did not provide its workers with proper rest and meal breaks, violating state laws. The co disclosed in a regulatory filing earlier this year that it had 76 such cases; resolving 63 in one fell swoop would leave just 12 remaining cases. The total amount Wal-Mart will pay to settle the 63 cases will depend on how many current and former employees submit claims under the individual cases, but Wal-Mart has agreed to pay at least $352 mln, and as much as $640 mln. The co also agreed to continue using electronic systems to document its compliance with state and federal labor laws. The co would not discuss whether it would formally admit wrongdoing in any of the settlements.
J.P Morgan changes their 2009 est on Goldman Sachs and Morgan Stanley. The firm sees the 2009 outlook for almost every business as challenging putting pressure on core revenues at GS and MS even though the writedowns should moderate.
They continue to avoid the brokerage sector, but recommend GS for those that want exposure to the sector. The firm cuts their 09 GS EPS est to $6.25 from $7.00 (consensus is $7.98), and raises their MS 09 EPS est to $2.35 from $2.15 (consensus is $2.30).
The Wall Street Journal reports Toyota (TM) on Monday warned it expects to make its first-ever operating loss in the fiscal year through March as recessions at home and abroad corral Japan's biggest automobile maker into as tight a corner as it has ever known. Citing the strength of the yen and a recession-sprung slump in vehicle sales in key markets like the U.S., Europe and Japan, Toyota said it now expects a consolidated operating loss of 150 bln yen, or about $1.68 bln, in the fiscal year through March. It's a kind of emergency that we've never experienced before," said Toyota President Katsuaki Watanabe, speaking at a news conference here in the co's home prefecture in western Japan. "The environment surrounding us is extremely harsh. Toyota on Monday also reduced its revenue projection to 21.5 trln yen from 23 trln yen. This reduction is in line with a cut in its estimates for global vehicle sales to 7.54 mln in the fiscal year, down 8.5% from the 8.24 mln it previously expected to sell.