Amazon
Amazon.com, Inc. (NASDAQ:AMZN) reports earnings on 10/25, after the market close.  Analysts expect an in-line 3Q, driven by strong digital media sales and mobile usage.

Q3 Concerns

Global traffic data shows modest deceleration from lofty levels.  Aggregating monthly global page views and minutes data from comScore, page view growth on Amazon decelerated from +64% in 2Q to +42% in 3Q, and minutes decelerated from +66% growth in 2Q to +51% in 3Q, although we do caveat, this data does not include mobile e-commerce. ChannelAdvisor data, which does include mobile, also showed deceleration from +48% in 2Q to +40% in 3Q.  Barclays lowered their price target on Amazon.com, Inc. (NASDAQ:AMZN) shares to $230 from $245.

Based on above data, Barclays lowered their forecasts for Amazon, yesterday. Their new 3Q revenue estimate calls for +26% Y/Y growth versus +29% prior. They also modestly lowered their 4Q revenue growth and EPS growth as well.

Morgan Stanley analysts are optimistic that Amazon can exceed estimates for 4Q revenues (50K seasonal employee ads in 4Q per press release).  Amazon.com, Inc. (NASDAQ:AMZN) appears to be ramping up for a big 4Q, many drivers seem positive for revenues and negative for margins.

Int’l Kindle launch may impact 4Q

In addition to U.S. launches, Amazon.com, Inc. (NASDAQ:AMZN) also launched 2 versions of the Kindle Fire in the UK, France, Germany, and Italy for the first time. The int’l launch may not be well understood by the Street, and could create added uncertainty around 4Q guidance as the Street has little visibility on European HW sales/margins. Morgan Stanley notes that the international launch pricing appears to be at a premium to the U.S. pricing, which may help with margins.

Other key issues for 4Q include

1) 3P unit mix given tougher comps for 3rd party units; 2) shipping cost trends (less cost pressure in recent quarters); 3) fulfillment center build and huge number of hires expected in 4Q (hopefully due to strong sales expectations); 4) data points on Kindle Fire orders; 5) 4Q cap ex outlook; 6) financial impact of change in booking pricing from agency to wholesale; 7) tax collection in California; and 8) European consumer spending pressure. Taken together, these indicators suggest strong revenues, but lower operating margins.

Positives for Q4

4Q12 revenue could be helped by: (1) robust Kindle Paperwhite and Kindle Fire HD sales; (2) continued growth in Amazon Web Services and incremental 3rd-party sales; and (3) upside in recognized revenue from a recent eBook settlement. However, Amazon’s tendency is generally to guide conservatively and thus investors may not actually see upside confirmation on holiday growth, until Amazon.com, Inc. (NASDAQ:AMZN)’s 4Q12 report in January 2013.

Disclosure: No position