The Zacks Analyst Blog, Microsoft, Sony, Apple and Coach

The Zacks Analyst Blog, Microsoft, Sony, Apple and Coach

PR Newswire

CHICAGO, Jan. 31, 2013

CHICAGO, Jan. 31, 2013 /PRNewswire/ announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include (Nasdaq:AMZN),
Microsoft (Nasdaq:MSFT), Sony (NYSE:SNE), Apple (Nasdaq:AAPL) and Coach, Inc.


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Here are highlights from Wednesday's Analyst Blog:

Amazon Gains from Holiday Spending's (Nasdaq:AMZN) fourth quarter earnings of 21 cents missed the
Zacks Consensus Estimate by 8 cents (27.6%). However, shares appreciated 8.9%
in extended trading, more than making up for the 5.7% decline during the day,
due to operating margin improvement for the first time in five quarters.


Amazon reported revenue of $21.3 billion, up 54.0% sequentially and 22.0% from
the year-ago quarter. This was in line with the guidance for the quarter of
$20.3-22.8 billion (up 55.7% sequentially, or up 23.3% year over year at the
mid-point), although short of our expectations. Year-over-year revenue growth
was 23% excluding unfavorable currency impact.

Around 57% of sales were generated in North America, representing a sequential
increase of 54.4% and a year-over-year increase of 23.0%. The balance came
from the International segment, which grew 53.5% sequentially and 20.8% year
over year (23% excluding unfavorable currency impact).

Active customer accounts increased by 12 million to more than 188 million.
Active seller accounts stayed above 2 million. Paid (third-party) units were
39% of total units in the third quarter, compared to 41% in the second

Key strategies for driving revenue growth remain a vast selection, competitive
pricing, free shipping, user experience on Amazon properties and the Amazon
Prime program. Fulfillment centers are also important, since they are
essential for providing the level of customer service that Amazon customers
have come to expect of the company. Over the past year, Amazon has been
investing heavily in fulfillment and technology & content.

Segment Details

Amazon's North America Media business was up 31.1% sequentially and 13.3% from
last year to 14% of total revenue. The consumption of digital content across
categories is helping the business. While selling and lending books on the
Kindle platform continues, Amazon is also developing its direct publishing

In addition to Kindle ebooks, Amazon is going great guns with its video
content. Prime Instant Video has the broadest reach, across Kindles,
Microsoft's (Nasdaq:MSFT) Xbox 360, Sony's (NYSE:SNE) Playstation 3, Apple's
(Nasdaq:AAPL) Mac or other PCs, as well as on TV.

Additionally, titles were expanded to 36,000 movies and TV episodes in the
last quarter. Amazon's reach and value proposition are making it a key player
in the video distribution business. The category saw strong double-digit
growth in four of the last five quarters.

The Electronics and General Merchandise (EGM) business in North America (40%
revenue share) was up 68.0% sequentially and 23.6% from last year. EGM is a
more seasonal business with holiday-driven spending having a significant

This seasonality has increased manifold since Amazon launched the Kindle
platform. Therefore, year-over-year comparisons are more meaningful. We see
very strong double-digit growth in each quarter since December 2009, which is
indicative of the expansion in the market and Amazon's growing position within

Amazon's International media business (17% of total revenue) was up 51.4%
sequentially and 4.8% year over year. EGM, which was around 26% of total
revenue, grew 55.3% sequentially and 34.7% from last year. This seems to
indicate a greater preference for purchasing electronics rather than content
in international locations.

Once the electronics business gains momentum and Amazon has enough fulfillment
centers set up, we expect further investment in content. Amazon now has Kindle
stores in Brazil, Canada, China and Japan where thousands of local language
books are being sold. Therefore, new product categories, better selection
within categories, competitive prices and free shipping remain drivers.

The Other segment, while still small (around 4% of total revenue, mostly in
North America) includes Amazon Web Services (AWS). The North America business
grew double-digits from both the previous and year-ago quarters. Growth in the
international business was strong on a sequential basis, but not with respect
to the comparable quarter of the prior year. During the year, AWS launched 159
new services and also reduced prices.

Coach Downgraded to Strong Sell

Zacks Investment Research downgraded Coach, Inc. (NYSE:COH) to a Zacks Rank #5
(Strong Sell) on Jan 29, 2013.

Why the Downgrade?

Coach witnessed a sharp downward revision in estimates after posting
lower-than-expected second-quarter fiscal 2013 results on Jan 23, 2013.

The quarterly earnings of $1.23 per share fell short of the Zacks Consensus
Estimate of $1.29 but rose from $1.18 earned in the prior-year quarter.

Management cited that the challenging macroeconomic conditions and intense
promotional strategies undertaken by competitors in the women's handbag
category muted the company's performance in North America. However,
international results remained a bright spot in the quarter.

Coach said that net sales for the quarter came in at $1,503.8 million, up 4%
from the year-ago quarter but came below the Zacks Consensus Estimate of
$1,605 million. We also remain concerned about erratic consumer behavior and
soft economic recovery.

The Zacks Consensus Estimates for the third and fourth quarters of fiscal 2013
dropped 3.5% and 4.2%, to 83 cents and 92 cents per share, respectively, over
the past 7 days. Moreover, for fiscal 2013 and 2014, the Zacks Consensus
Estimates fell by 2.6% and 4.7% to $3.78 and $4.24 per share, respectively,
over the same time frame.

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