Amazon May Miss Sales Estimates, Goldman Sachs Predicts

Amazon.com Inc. (AMZN) may miss fourth- quarter sales estimates, Goldman Sachs Group Inc. predicted, citing slower-than-expected e-commerce growth over the holidays.

Amazon’s revenue may rise 38 percent from a year earlier to $17.9 billion, Heather Bellini, an analyst at Goldman Sachs, said today in a report. That’s less the $18.2 billion average analyst estimate (AMZN), according to data compiled by Bloomberg.

Bellini based her projection on data from ComScore Inc., which found that total e-commerce sales rose 15 percent in the November-December holiday shopping season. While Amazon historically outpaces the broader market by 23 percentage points, that still doesn’t get the company to the 40 percent growth analysts were expecting, she said.

“While the ComScore numbers are just one data point, which does not capture international sales or breakout individual companies’ sales, taken alone they seem to suggest the potential for downside risk,” Bellini said in the report.

Amazon’s bottom line also is suffering as the company steps up spending on fulfillment centers and builds out Web services. Chief Executive Officer Jeff Bezos said in October the company may post a loss in the fourth quarter. Operating margin may narrow to 0.84 percent in the period, from 3.66 percent a year earlier, according to data compiled by Bloomberg.

Brighter Outlook

Gene Munster, an analyst with Piper Jaffray Cos. in Minneapolis, gave a more upbeat view on fourth-quarter sales. He said in a report that Amazon may beat estimates, boosted by sales of its new Kindle Fire tablet. Amazon said earlier today that it sold “well over” 1 million Kindles a week in December, thanks to record demand fueled by the Kindle Fire.

Amazon shares were little changed at $173.86 at today in New York. The stock has declined 3.4 percent this year.

Total online spending in the U.S. increased to $35.3 billion in the first 56 days of the holiday season, ComScore said yesterday. The Reston, Virginia-based firm compiles Web- traffic data from about 2 million consumers in 170 countries.

Amazon’s top three sellers over the holidays were the Kindle Fire and two electronic-book readers, the Kindle Touch and the basic Kindle, the Seattle-based company said today. The company also reported a rise in people giving electronic books to others. Kindle book gifts climbed 175 percent from a year earlier in the period from Nov. 25 to Christmas Day, Amazon said, without providing precise sales data.

‘Positive Momentum’

The company began selling the $199 Kindle Fire on Nov. 14, challenging Apple Inc. (AAPL)’s iPad with a tablet that costs less than half as much. The Kindle Fire is outpacing more established products from Samsung Electronics Co. (005930) and Barnes & Noble Inc., according to IHS Inc. Apple will remain the market leader, shipping 18.6 million iPads in the fourth quarter, the research firm estimates.

While Amazon is losing money on every Kindle Fire it sells, according to IHS, the device helps encourage the ordering of books, videos and other content. Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco, estimates that Amazon will sell 5 million to 6 million Kindle Fires this quarter, as does Munster.

“It shows positive momentum,” Sebastian said.

To contact the reporters on this story: Beth Jinks in New York at bjinks1@bloomberg.net; Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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