Amazon vs. Apple: Earnings.

Today, Amazon released financial results for the previous quarter.

The Numbers

• Revenue was $17.43 billion, an increase of 35% year-over-year
• Profit was $177 million, a decrease of 58% year-over-year
• Earnings per share were $0.38, a decrease of 58% year-over year
• Cash flow was increased by $400 million
• Gross margin was 1%

Compare that with Apple’s latest earnings report.

• Revenue was a record $46.33 billion, an increase of 73% year-over-year
• Profit was a record $13.06 billion, an increase of 118% year-over-year
• Earnings per share were $13.87, an increase of 116% year-over-year
• Cash flow was increased by $17.5 billion
• Gross margin was 44.7%

Perspective

Let me put it another way. In the previous quarter, Amazon profited $177 million. Apple profited $133 million - per day.

M.G. Siegler describes why there is such a disparity:

Well, first and foremost, most of the goods they sell have low margins. But even the goods that should have high margins — hardware — have low margins.

Or worse. Take the Kindle Fire — Amazon’s most popular product (though don’t bother asking how many they actually sold) — it’s sold at a loss.

What is really perplexing is that Amazon’s stock is still much more expensive than Apple’s. The P/E ratio¹ for Amazon (102.5) is far greater than Apple’s (12.9). It is beyond my understanding why a financial juggernaut like Apple is priced an order of magnitude cheaper than a company that can barely muster 1% profit. Especially, when Apple has grown at a rather sustained rate over the past six years. Deluded analysts indeed.

I realize that the companies aren’t exactly apples-to-apples (see what I did there?). However, Amazon has entered the tablet market with the support of a fully inclusive content distribution system - much like Apple. I think it is a reasonable comparison to make.