Amazon's shopping cart still doesn't have a profit in it

Amazon posted its numbers for the first quarter yesterday, and how various media sources spun those numbers gives you some idea of how the company gets away with what it does. The serious financial press, for example, saw what they always see in Amazon’s quarterlies — astounding gross income that nonetheless represents an equally astounding plunge in earnings.

For example, here’s the lede from the Wall Street Journal report: “Amazon.com Inc. (AMZN) posted a sharp decline in quarterly profit Thursday, as the online retailer continued to emphasize growth at the expense of margins.”

Most of the rest of the mainstream media, however, were distracted by the astounding gross, or by the fact that — as many of them put it — Amazon “blew away” the predictions of market analysts, who have been troubled by the fact that the company, well, can’t ever seem to lift earnings despite making gargantuan amounts of cash every quarter — which is what happens when you base your company on selling loss leaders.

Take the Associated Press’ version of the story: “Amazon.com Inc. posted first-quarter profits Thursday that blew by analysts’ estimates and boosted the company’s stock in extended trading. The online commerce giant said its Kindle Fire tablet computer was its best-selling item and helped lift revenue from digital movies and books.” Note not only that this report doesn’t so much as mention the “sharp decline” in profitability as per the WSJ report, it finds a way to say something completely opposite. What’s more, although Amazon has never posted sales numbers for anything it sells, including especially the Kindle, this report takes the company’s unsubstantiated claim about Kindle sales and puts it in the lead graf.

A Fox Business report did exactly the same thing, using equally dramatic language: “Amazon.com’s first-quarter financial results smashed expectations, as the company’s Kindle devices grow in popularity with consumers, and the e-commerce giant reported strong revenue growth both at home and abroad.”

So what really happened? The company posted net sales of $13.19 billion — a 34% rise over last year’s first quarter sales. It also saw earnings fall 35% from last year’s first quarter earnings. The company’s net profits came to 28 cents per share — a dramatic plunge from last year’s 44 cents per share.

So how come “Investors shrugged off a 35 per cent fall in net income,” as a Financial Times report put it?

Because, as a CNN Money report explains, “it was much better than the 7 cents per share forecasts from analysts polled by Thomson Reuters.”

Got that? Utter devastation was predicted, and the company beat expectations by delivering simple disaster.

The result? No sooner had the company posted its numbers late yesterday than, as a New York Times story reports, “its shares went up almost 15 percent in after-hours trading.”

Kids, don’t try this at home.