March 21, 2023

Profit Falls 13% at Target, and It Lowers Expectations

The retailer on Wednesday lowered its annual profit forecast after reporting a 13 percent drop in second-quarter profit, as its expansion into Canada — its first foray outside the United States — has proved more challenging than it previously thought.

But the company is also contending with mixed economic signals that have caused it and its rivals, like Walmart and Macy’s, to temper their forecasts for the remainder of the year. While jobs are easier to obtain and the housing market is gaining momentum, these improvements have not been enough to persuade most Americans, who are facing stagnant wage growth, to spend more freely.

“As we monitor the economy and consumer sentiment, we continue to see a mix of signals in which emerging optimism is balanced with continuing challenges,” Gregg W. Steinhafel, Target’s chairman, president and chief executive, said on an earnings call with investors.

Target earned $611 million, or 95 cents a share, in the quarter ending Aug. 3, compared with $704 million, or $1.06 a share, in the period a year earlier.

Excluding certain items related to its expansion into Canada, the retailer earned $1.19 a share.

Total revenue reached $17.12 billion, up 2 percent from $16.78 billion a year ago. Analysts had expected earnings of 96 cents a share on revenue of $17.28 billion, according to FactSet.

Revenue at stores open at least a year — a gauge of a retailer’s health — rose 1.2 percent. That was below the 1.9 percent analysts had expected. Its shares fell 3.6 percent on Wednesday, or $2.45, to $65.50.

Like Walmart, Target said that its customers continued to struggle with a 2 percentage-point increase in the Social Security payroll tax since Jan. 1. That means take-home pay for a household earning $50,000 a year has been cut by $1,000.

For the full year, Target now expects earnings per share to be at the low end of its previous guidance of $4.70 to $4.90. Target said that it expected its costs related to its Canadian expansion will depress earnings by 82 cents, up from its projected 45 cents a share. In May, the company trimmed its projections from the original outlook of $4.85 a share to $5.05, citing cautious shoppers. Analysts expect $4.29 a share for the full year.

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EBay Posts Gains, but Results Miss Estimates

In first quarter financial results released on Wednesday, revenue swelled to $3.7 billion, up 14 percent from a year earlier. EBay said net income was $677 million, or 51 cents a share, a 19 percent increase from a year earlier.

“We had a strong first quarter, with accelerating user growth across both Marketplaces and PayPal,” said John Donahoe, eBay’s president and chief executive, in a news release. “Technology is creating a commerce revolution, and we are in the forefront with strong mobile leadership and a focus on helping retailers and brands engage consumers anytime, anywhere.”

But the results, as well as second-quarter forecasts, fell short of Wall Street’s expectations, causing the stock to fall 1.6 percent in after-hours trading. The company forecast a second-quarter profit of 61 to 63 cents a share and revenue of $3.8 billion to $3.9 billion. Analysts were looking for earnings of 66 cents a share on revenue of $3.95 billion, according to Thomson Reuters.

EBay has successfully transformed itself from a site known as the virtual equivalent of a yard sale or dusty thrift shop to a sophisticated online marketplace, now competing with Amazon and other online retailers. It said that fixed-price merchandise, as opposed to its original auctioned merchandise, is now 68 percent of all goods sold. Most recently, the company has been experimenting with same-day delivery and courier services that let customers order through their mobile devices for delivery hours later. The company reported that its core retailing business, called Marketplaces, still shows strong growth, adding close to 4 million users during the period, bringing the total to 116 million, a lift of 13 percent.

Revenue from that division also grew 13 percent to $1.96 billion in the quarter. Four years ago, revenue in the unit was declining 18 percent. Some analysts say the future of the company depends largely on the continued success of its payments products, which primarily means PayPal, eBay’s mobile payments business, which continues to be a fountain of revenue. During the first quarter, the company said PayPal sales grew 18 percent, to $1.5 billion. The company also added 5 million PayPal customers during the quarter, bringing the total to 128 million.

Benjamin Schachter, a financial analyst at Macquarie Securities who follows eBay, said the company’s momentum is reflected in its stock price, which has steadily risen and closed at $56.10 on Wednesday.

“They’ve turned it around in the last couple of years,” he said. “But the question is, Can they keep that momentum going?”

That, he said, depends on how successfully eBay enables shoppers to buy and sell using their mobile devices as well as how they turn PayPal into an offline, real-world alternative to credit cards and cash.

“The idea is that when you walk into a store, instead of pulling out a Visa, you will pay with PayPal, either through your phone, saying your name or a separate, stand-alone device,” Mr. Schachter said. “The reason the stock is doing so well is because people are excited about the business possibilities.”

This article has been revised to reflect the following correction:

Correction: April 17, 2013

An earlier version of this article misstated the percent increase in eBay’s net income from a year earlier. It is 19 percent, not 20 percent. The error was repeated in the headline. The article also misstated revenue from the company’s Marketplaces division. It is 1.96 billion, not 1.54 billion.

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Business Briefing | Media: Washington Post Company Posts Third-Quarter Profit

Opinion »

Op-Ed: Hitting the Road

Bill Rodgers is closing his last running store, marking a sad farewell to a bygone era of great American runners.

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DealBook: Second-Quarter Profit Fell 42 Percent at Société Générale

Séverin Cabannes, left, and Frédéric Oudéa of Société Générale. The bank said it was hurt by slowing growth in Europe.Jacques Brinon/Associated PressSéverin Cabannes, left, and Frédéric Oudéa of Société Générale. The bank said it was hurt by slowing growth in Europe.

PARIS — Société Générale, the big French bank, reported second-quarter results on Wednesday that fell short of analysts’ estimates as it struggled against a downturn in Europe.

Net profit in the second quarter fell 42 percent, to 433 million euros ($530 million), compared with 747 million euros in the period a year earlier. Analysts were expecting the bank to earn 764 million euros in the latest quarter. The bank also said it was making progress in bolstering its capital cushion.

“Despite a challenging environment, the Société Générale Group has progressed, quarter after quarter, with its transformation strategy, in line with its objectives,” Frédéric Oudéa, the bank’s chief executive, said in a statement.

Société Générale took a series of write-downs related to past acquisitions, including 250 million euros on Rosbank in Russia and 200 million euros on TCW Group, a fund firm in Los Angeles. Analysts are waiting to see whether Société Générale sells TCW as part of a broader plan to raise money.

Like the results of its peers, the report raised concerns that financial weakness could persist as the debt crisis drags on.

The bank said growth in Europe slowed significantly in the second quarter, crimping some of its profitability from retail operations. Its international retail banking revenue fell nearly 2 percent, to 1.24 billion euros.

The bank signaled that it also continued to face financial challenges with its Greek subsidiary, Geniki Bank. In a statement, Société Générale said its operations in Central and Eastern Europe “excluding Greece” did well, but it did not provide figures for the Greek unit. Société Générale has recently cut financing to Geniki to a minimum as the Greek economy shrinks.

French banks have been reducing their exposure to Greece by selling much of the nation’s sovereign debt, and those with subsidiaries there are scrambling to figure out how to cope with the worsening situation. One of Société Générale’s French rivals, Crédit Agricole, said recently that it was in talks to sell its Greek subsidiary, Emporiki Bank, as soon as possible.

The debt crisis is also wreaking havoc on the investment banking business. The bank said customers remain reticent as policy makers struggle to find “durable solutions to the sovereign debt crisis.” Corporate and investment banking revenue fell more than 30 percent, to 1.22 billion euros.

Société Générale also noted deteriorating conditions in France, which has the largest economy in the euro zone after Germany’s. So far, France has avoided the worst of the debt crisis that first engulfed Greece and now Spain. But the economy has been softening, and the government’s share of the bill for cleaning up the crisis is likely to grow.

The bank’s French retail operations remained flat at 2.04 billion euros.

Shares of Société Générale rose 0.5 percent in Paris, to 18.11 euros.

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DealBook: Microsoft Takes Write-Down in Failed Digital Ad Foray

Microsoft owned up on Monday to the collapse of its biggest push into digital advertising, announcing that it would take a $6.2 billion accounting charge in its online services division for a failed acquisition.

The accounting charge, called a write-down of good will, was essentially a write-off of the value of aQuantive, a digital advertising company that Microsoft bought in 2007. It will effectively wipe out Microsoft’s fourth-quarter profit.

The company said it took the write-down because “expectations for future growth and profitability are lower than previous estimates” for the online services unit.

The charge will not affect the online services division’s operations or financial performance, Microsoft said.

“It’s disappointing, but it is not a shock at this point,” said Brendan Barnicle, senior research analyst at Pacific Crest Securities. “The industry has evolved beyond where aQuantive was when Microsoft bought it.”

Microsoft does make money in online advertising, but has relied on a number of digital advertising partnerships.

The deal for aQuantive was struck when technology and traditional advertising firms were desperately seeking footholds in the world of Internet display advertising. At the time, aQuantive was the biggest company Microsoft had bought in its history.

A month before the aQuantive acquisition, Google, Microsoft’s big rival in online advertising, purchased a similar firm, DoubleClick, for $3.1 billion. That deal has been highly profitable for Google, analysts say.

The purchase of aQuantive may well have been driven by pressure Microsoft was feeling at the time, not only from the DoubleClick deal, but by similar acquisitions by other companies. Microsoft bought aQuantive one day after the WPP Group bought 24/7 Real Media, another digital advertising company, for $649 million, and a month after Yahoo agreed to pay $680 million for Right Media, an online ad exchange.

All of the acquisitions were in one or another part of the display advertising business across the Web. Once highly profitable by indiscriminately pasting digital ads across the borders of millions of Web pages, the business has become under pressure as companies like Google got better at aiming for individual tastes with search advertising.

With DoubleClick, Google appeared to be using that personalization technology for the placement of banners and other display advertising.

Google used DoubleClick’s huge inventory of Web ads inside AdSense, Google’s self-serve ad placement technology for third-party Web sites.

AQuantive was a well-respected online agency based in Seattle, but its focus was on design and client services. The company did have ad inventory and an ad placement engine similar to DoubleClick’s at the time, but Microsoft did little to update it.

“It could have been another DoubleClick, but they would have had to know a business where publishers and advertisers meet, and then invest heavily,” said Todd Sawicki, chief revenue officer at Cheezburger, a publisher of several popular Web sites.

“Microsoft bought aQuantive in a reactionary move to Google buying DoubleClick, thinking that ad serving was its core strength,” he added. “Then they woke up the next morning and realized what they had.”

Brian McAndrews, the chief executive of aQuantive, was promoted to head Microsoft’s publisher and advertising group in August 2007, but left the company in December 2008. Now a venture partner with the Madrona Venture Group, Mr. McAndrews was recently elected to the board of The New York Times Company.

The poor performance of aQuantive has not hurt other parts of Microsoft’s online ad business. The company’s Bing search engine has grown, as has its revenue per search. Microsoft has struck a number of partnerships, including with Yahoo, WPP and App Nexus, which does real-time ad placement.

In May 2011 Microsoft paid $8.1 billion for the communications company Skype, its biggest purchase, and one that is thought to be going well for Microsoft.

Microsoft still has some innovative ad technology products, said Darren Herman, chief digital media officer at the Media Kitchen, a digital advertising agency. It may be using some of its partnerships to learn more about the online ad business as a prelude to an actual purchase, he said.

“There are a lot of people that think that Microsoft and App Nexus are going to link up,” Mr. Herman said. “It’s just a matter of when, not if.” Nonetheless, the end of possible competitor to Google’s DoubleClick ad placement engine left some even outside Microsoft feeling the sting.

AOL has a small ad engine, and so does 24/7, but for ad placement it’s really DoubleClick or bust,” said Mr. Sawicki. “It’s a phenomenal failure.”

Tanzina Vega contributed reporting.

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Stocks and Bonds: Shares Rise for a 3rd Day on Bank Earnings

Stocks rose for the third straight day Thursday, helped by results from Bank of America and Morgan Stanley and a report showing that the latest jobless claims dropped to a near four-year low.

The Standard Poor’s 500-stock index hit a five-month high, with the industrials, consumer discretionary stocks and financials leading gains.

Tech shares advanced, with earnings from a number of bellwether companies expected after the close. But those reports were mixed. Google fell short of Wall Street’s expectations, and its shares dropped 10 percent in after-hours trading.

“Google was the big disappointment because so much of their emphasis is developing products, specifically Android, where more dollars are going out than they anticipated,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

In the regular session, Bank of America climbed 2.4 percent to $6.96 after it reported a fourth-quarter profit from a loss a year earlier. Morgan Stanley reported a loss that was narrower than expected, prompting a 5.4 percent jump in its stock to $18.28.

Financial stocks “have pretty much bottomed here in the U.S.,” said Paul J. Simon, chief investment officer at Tactical Allocation Group in Birmingham, Mich.

“They represent some compelling value. We think a lot of the bad news has been discounted, and you’ve seen stock prices rallying in the beginning of the year,” said Mr. Simon, whose firm has been buying financials.

Financial shares have rallied this year. The S. P. financial index is up 8.1 percent for 2012, helping to push the S. P. 500 up 4.5 percent for the year.

In the latest snapshot of the economy, data showed the number of Americans filing for new jobless benefits dropped last week to the fewest since April 2008. It added to views that the economy is slowly advancing.

“The broad-brush impression from the data is that it’s a Goldilocks setup — inflation tame, but economic growth showing signs of accelerating,” said Greg Anderson, senior currency strategist at Citigroup in New York.

The Dow Jones industrial average rose 45.03 points, or 0.36 percent, to end at 12,623.98. The Standard Poor’s 500-stock index gained 6.46 points, or 0.49 percent, to 1,314.50. The Nasdaq composite index climbed 18.62 points, or 0.67 percent, to close at 2,788.33.

The Treasury’s 10-year note fell 24/32, to 100 5/32. The yield rose to 1.98 percent, from 1.90 percent late Wednesday.

American Express also posted results after the close, and its shares slid 1.9 percent in extended trading to $49.98.

In a sign of optimism about Europe, Spain and France drew strong demand at government debt auctions.

The FTSEurofirst 300 index of top European shares closed up 1.1 percent at 1,046.30, near five-and-a-half-month highs. World stocks, as measured by the MSCI All World index, rose 0.9 percent to hit two-and-a-half-month highs.

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DealBook: Dodging Banking Woes, Wells Fargo Posts 20% Jump in Profit

7:46 p.m. | Updated

Wells Fargo is somewhat unusual among big banks — it continues to produce profit gains.

The bank, the nation’s largest consumer lender, said on Tuesday that its fourth-quarter earnings rose 20 percent, an indication the bank was coping with a lackluster economy better than many of its Wall Street competitors.

Wells Fargo reported earnings of $4.1 billion, or 73 cents a share, in the quarter as its loan portfolio showed signs of improving and it largely dodged the pitfalls of the volatile investment banking business, which has burned its competitors.

The figures — padded somewhat by the bank’s decision to set aside $600 million less in reserves to cover soured loans — narrowly beat the 72 cents a share that analysts were forecasting.

In contrast, Citigroup on Tuesday reported a disappointing 11 percent slump in fourth-quarter earnings. On Friday, JPMorgan Chase said that its fourth-quarter profit declined 23 percent.

The strong fourth-quarter results at Wells Fargo guided the bank to a $15.9 billion profit in 2011, up 28 percent from 2010.

“The quality of earnings was really good, and it was broad,” Timothy J. Sloan, Wells Fargo’s chief financial officer, said in an interview.

Investors welcomed the report, too, sending the bank’s shares up nearly 1 percent, to $29.83, on Tuesday.

But the profit gains at Wells Fargo were limited by declining revenue, reflecting a setback felt across the banking industry amid the sluggish economic recovery. A new round of federal regulations also continued to weigh on revenue at banks.

Wells Fargo’s fourth-quarter revenue fell to $20.6 billion from $21.5 billion in the period a year earlier.

But Wells Fargo is faring better than its competitors. The bank has an edge over Wall Street titans that run large investment banking operations, a business that has suffered from rampant volatility in the markets.

Wells Fargo does not break out its investment banking results, but the wholesale banking unit, which includes the sales and trading business and the corporate lending unit, earned $1.6 billion in the fourth quarter. The results were down only 3 percent from the period a year earlier.

And while other big banks struggle to shed the legacy of the mortgage bust, Wells Fargo has patched up its giant lending operation and produced greater profits. In addition to reducing the expense for its bad-loan reserve by $600 million, Wells Fargo said its bucket of nonperforming loans in the fourth quarter declined roughly 20 percent from the period a year earlier.

“We like lending,” Mr. Sloan said, adding that “we want to grow.”

Businesses in recent months have increased their appetite for credit, particularly at Wells Fargo. The bank also continued to dominate the mortgage business, with more than a quarter of the market. Its loan total grew to $769.6 billion in 2011, from $757.3 billion at the end of 2010.

So while many potential homeowners continue to balk at securing new loans, Mr. Sloan said a consumer spending revival could be on the horizon. “Those who are employed are slowly but surely improving,” he said.

The uptick in lending has bolstered the bank’s profits.

Profit in the community banking division, which includes Wells Fargo’s retail branches and mortgage business, rose 30 percent to $2.5 billion in the fourth quarter, compared with the quarter a year ago. Wells Fargo has also grown since it took control of the Wachovia Corporation at the peak of the financial crisis, which allowed it to build a network of retail branches on both coasts.

“The deposit side of the business is one place where Wells is very well positioned,” said Brian Foran, a senior analyst with Nomura. “They don’t know what to do with all these deposits.”

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Retailers Post Sales Gains, but Discounts Hurt

Sales at stores open at least a year at major retail chains rose 3.4 percent compared with December 2010, according to Thomson Reuters data, just slightly above the 3.3 percent that analysts had expected.

But those sales were largely gained by big markdowns that will probably lead to lower profits at retailers, and chains including Target, Kohl’s and J. C. Penney lowered their fourth-quarter profit expectations.

Shoppers seemed inclined to buy only when they saw huge discounts, and that suggested American consumers are still not back on their feet.

“Retailers came in with pretty conservative assumptions and they were hoping to blow them out of the water — they really didn’t,” said David L. Bassuk, managing director and head of the retail practice at AlixPartners, a consulting firm. His store visits over the holidays indicated that many of the promotions were “unplanned,” he said, a tactic retailers resort to in response to slow spending.

“Retailers hope that as they plan some promotions on key items, that will entice the consumer to spend money,” he said. “That didn’t happen — the planned promotions were not as exciting as the consumer today expects, so the retailer has to revert back to things that were unplanned, like ‘50 percent off our whole store,’ ‘60 percent off our whole store,’ which is when you can see times are tough.”

The top five performers all beat analyst estimates by at least 3 percentage points. Those were the teen stores Zumiez and the Buckle; the large discounters Ross and TJX; and Nordstrom.

Apparel stores, which were heavily promotional as the month went on, fared the best as a sector, with sales at stores open at least a year increasing 7.2 percent.

Those figures exclude the Gap Inc. chains, which include Old Navy and Banana Republic, where same-store sales declined 4 percent. The Gap, Wet Seal, Cato, Bon-Ton and Freds reported the worst same-store sales.

Target and Kohl’s, which both do huge promotions around the holidays, came in below analyst estimates, and both reduced their fourth-quarter profit expectations on Thursday.

Target’s same-store sales were up 1.6 percent, versus expectations of a 3.1 percent increase. Target said in a statement that electronics, movies, music and books were particularly weak performers. It reduced its fourth-quarter profit expectations to $1.35 to $1.43 a share; it had earlier estimated $1.43 to $1.53 a share.

Kohl’s same-store sales declined 0.1 percent, while analysts had expected a gain of 2.2 percent. Kohl’s said in a release that low sales of cold-weather gear were partly to blame. It lowered its fourth-quarter profit expectations to $1.70 to $1.73 per share, down from $1.93 to $2.04 a share.

J.C. Penney also lowered its fourth-quarter estimate, saying it now expected to earn 65 to 70 cents a share instead the of $1.05 to $1.15 it had previously expected.

Many stores seemed to be using promotions to get items out the door at the expense of profits. John D. Morris, an analyst at BMO Capital Markets, said in a note to clients that promotional activity at apparel stores was running above last year’s December level. “Promotions were aggressive throughout the month, and particularly in the 10 days before Christmas,” he said.

American Eagle Outfitters said in a release that in the last two weeks of December, “the company made a strategic decision to take a more aggressive promotional stance. While impacting margins, the decision enabled the company to generate strong unit sales.” Same-store sales for November and December together increased 12 percent, it said, although same-store sales slowed significantly in December. (Because it does not regularly report monthly sales, American Eagle is not included in the Thomson Reuters tally.)

J. C. Penney said its average price of an item fell for the month, though transactions were up. There was a “higher level of markdown activity caused by overall softer sales trends,” said Angelika Torres, a Penney spokeswoman, in prepared remarks.

Mr. Bassuk, the retail consultant, said that with consumers still unwilling to buy at full price, 2012 would probably bring “closing of stores and, I think, closing of retailers . It’s a more dire situation than many had anticipated.”

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Metal Prices Hurt Alcoa’s Third-Quarter Profit

Alcoa’s chief executive, Klaus Kleinfeld, warned of weak economic conditions through the year, particularly in Europe, “as confidence in the global recovery faded.”

That sapped aluminum demand from the automotive, industrial products, construction and packaging sectors since the second quarter, with only the aerospace and transport sectors growing.

The third-quarter profit jumped from a year ago, but was lower than the second quarter and fell short of Wall Street expectations, which had already been lowered because of a slump in global metal prices.

Alcoa’s chief financial officer, Chuck McLane, said in a conference call that worries about Europe’s debt crisis prompted customers there to reduce orders sharply, even into September.

The first Dow component company to report third-quarter results, Alcoa said earnings were $172 million, or 15 cents a share, compared with $61 million, or 6 cents a share, a year earlier.

The company said income from continuing operations was also 15 cents a share, but down from 28 cents a share in the second quarter. Analysts on average were expecting earnings of 22 cents a share, according to Thomson Reuters.

Alcoa said revenue rose 21 percent, to $6.4 billion from a year earlier, but was 3 percent lower than the second quarter of this year as metals prices slumped sharply.

Aluminum prices fell almost 20 percent in the third quarter on global economic concerns, and Alcoa’s share price fell 41 percent during the same period.

Still, aluminum prices could easily rebound if the sentiment about the European economy showed any improvement, analysts said, which would immediately benefit Alcoa.

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Amazon’s Profit Falls, but Beats Expectations, as Company Invests

The Internet retailer said Tuesday that its second-quarter profit dropped by 8 percent, which might seem like bad news. But the decline was not nearly as much as Amazon, or analysts, had expected, and the profit was being sacrificed for what the company said was a good cause — new investments in technology and warehouses. Revenue continued to be strong, rising 51 percent.

Three months ago, Amazon predicted that second-quarter profits might fall by as much as two-thirds. But the company is apparently selling so many things to so many people that it can make sizable investments and barely feel the pain.

In after-hours trading, investors celebrated by pushing the stock up $13.57, to $227.75. Amazon shares have quadrupled in recent years.

“Low prices, expanding selection, fast delivery and innovation are driving the fastest growth we’ve seen in over a decade,” Jeff Bezos, Amazon’s founder and chief executive, said in a statement.

So what if expenses soared and profit margins shrank? Amazon has never emphasized profit as some short-term investors might have wished. It took years to turn a profit because it was working so hard to achieve a dominant position in Web retailing. That distinction was achieved long ago; now it is once again spending heavily to solidify and extend its position — mostly by building two kinds of storage centers, for physical goods and for data.

Three weeks ago, Amazon announced it would open a 900,000-square-foot warehouse in Plainfield, Ind., its fourth in Indiana. The next day it announced its fourth warehouse in Arizona, this one a 1.2 million-square-foot behemoth in Phoenix.

The original 2011 plan was to open nine new fulfillment centers. Thomas J. Szkutak, the company’s chief financial officer, said in a conference call with analysts Tuesday afternoon after the results were announced, that the total had risen to 15, “and we’re actually planning on a few more than that.” He said the number of pre-2011 centers was “in the low 50s.”

The Seattle-based company is also expected to follow the success of its Kindle e-reader by introducing a multipurpose tablet this fall. The tablet will allow users to read the electronic books they bought from Amazon, listen to the music they bought from Amazon and watch video they bought from Amazon, all on one device.

The company reported that net income for the quarter fell to $191 million, or 41 cents a share, compared with $207 million, or 45 cents a share, in the second quarter of 2010. The comparison would have been worse, but the latest quarter’s results were helped by a $15 million investment gain. Revenue rose to $9.91 billion. Favorable foreign exchange rates contributed $477 million to the 2011 sales results.

Analysts had expected second-quarter earnings of 35 cents a share on revenue of $9.373 billion, according to Thomson Reuters. During the conference call, at least one analyst offered his congratulations.

When Amazon reported in April that its net income in the first quarter was down an unexpected 33 percent from 2010, it simultaneously squelched expectations for the second quarter. Two bad quarters are the beginning of a trend, but investors bid up the stock price about 10 percent in the last three months. The market value of Amazon at Tuesday’s close was $100 billion.

Amazon recently achieved a milestone with regard to its original business, bookselling. In May, less than four years after the introduction of the Kindle, the company said it was selling more e-books than physical books. Last week, as if to punctuate the quickening transition to digital, came the news that the Borders chain of bookstores was liquidating.

When Amazon began mailing books to Internet buyers in 1995, Borders reigned as the Amazon of the era; it was smart, dominant and feared. But despite Borders’s selling many copies of “The Innovator’s Dilemma,” Clayton Christensen’s classic work on how successful companies ignore disruptive technologies at their peril, it seems as if no one at the chain may have read it. Borders essentially ignored the Internet, and the Internet mowed it down.

Mr. Bezos has always been determined not to be out-innovated. The new tablet will put the company into direct competition with Apple and its iPad, plus a clutch of would-be iPads from other companies. “Their e-book success is enormous but their success with digital video and music is not so enormous,” said Bill Rosenblatt of GiantSteps Media Technology Strategies, a consulting firm. “They need to do something to address the fact that people are using media consumption devices that handle everything.”

It will be an uphill battle to take on Apple and the others, Mr. Rosenblatt said, but he would not count Amazon out.

In the meantime, the retailer once again warned that profits would suffer because it was investing in the future. It said Tuesday that operating income could decline in the third quarter by as much as 93 percent.

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