Amazon This autumn earnings preview: Analysts anticipate report income of $137B, decrease earnings

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Amazon will report its fourth quarter earnings Thursday afternoon, revealing financials for the critical peak shopping season.

Analysts are expecting revenue for the holiday quarter at $137.6 billion, up about 10% year-over-year and coming in on the higher end of the company’s guidance. It would set a quarterly record for revenue and would push full-year 2021 revenue to approximately $468 billion, also a new record.

Earnings per share is estimated to come in at $3.70, compared to $14.09 in the year-ago quarter.

Amazon’s profits also plunged in the third quarter. Amazon CEO Andy Jassy in October warned that profitability would again take a hit in the fourth quarter “as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season.”

Amazon CFO Brian Olsavsky added that the availability of workers became Amazon’s primary challenge in keeping packages moving smoothly through its system in the third quarter, not the normal limiters of storage space or fulfillment capacity.

Olsavsky said the overall shortage of labor in the U.S., combined with Amazon’s increasing need for workers has resulted in increased wages and sign-on incentives as companies compete for scarce workers.

The company employed 1.468 million people worldwide as of the end of the third quarter, up from 1.335 million people at the end of the second quarter.

Amazon earlier this year detailed the ways it geared up for the holiday season, attempting to overcome bottlenecks in the global supply chain.

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For the first time in Amazon’s history, the company’s revenue from online and physical retail store sales in the third quarter represented less than 50% of its overall revenue, due to steady increases in areas such as its Amazon Web Services cloud business and revenue from advertising.

Brad Erickson, analyst with RBC Capital Markets, expects the company’s cloud computing and advertising arms to help counterbalance “harsh retail seasonality” for the fourth quarter.

Analysts will also be looking for updates on Amazon’s same-day delivery expansion and the company’s pending acquisition of MGM.

Shares of Amazon have rebounded slightly this week after falling more than 10% over the past month amid a broader dip for tech stocks. The company’s market capitalization is about $1.5 trillion.

Last year’s fourth quarter report included news that Jeff Bezos was stepping down as CEO. Bezos was replaced this past July by Jassy, the former Amazon Web Services chief. Bezos remains as executive chairman.

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