Some might fear it’s a sign of the end of the dot com boom. Amazon, that beacon of profitability in the days when dotcoms just made huge losses, has seen profits slump by 35%.
Net income in the last quarter was $51mn, from $78mn a year ago.
Is this is a sign that the market is becoming saturated, and that the Amazon growth story is nearing its end?
Actually, although there have been signs that the online book seller has been approaching a flat period for growth, that was not the case last quarter.
The fall in profits was due to higher expenses, as the company upgrades some of its technology.
In fact sales were up a very healthy 20%.
The current market valuation of Amazon puts it at 41 times earnings estimates for 2007. That’s a very high p/e ratio, and the company will need to start seeing profits jumps significantly for the next few years to justify that share price.
© Investment & Business News 2013