Amazon, Starbucks fall after earnings letdowns
Shares drop after hours, after earnings and guidance from both high-flyers disappoint investors. The S&P nearly sets a new closing high.
Starbucks (SBUX) shares also moved more than 2% lower, despite boosting its guidance for the fiscal year.
The earnings reports came after stocks finished higher -- in a rally set off by a better-than-expected report on jobless claims. It wasn't clear if the reports will depress stocks on Friday.
The Standard & Poor's 500 Index ($INX) came within about a point of its all-time closing high of 1,593.37 before falling back.
Amazon.com said it earned 18 cents a share in the first quarter, ahead of estimates of 9 cents a share. But the earnings were down from 28 cents a share a year ago. Revenue was $16.07 billion, up 21.9% from a year ago and slightly less than the Street estimate of $16.16 billion.
The company expects $14.5 billion in revenue for the second quarter, up from $12.83 billion. Wall Street, however, has been expecting $15.9 billion. Operating income, meanwhile, is projected in a range of a loss of $340 million to a gain of $10 million, a touch lighter than expected.
Most analysts said the company continues to invest heavily in new equipment and fulfillment centers, to make shipping more efficient.
As a result, free cash flow -- the remainder after capital expenditures -- has been squeezed. Free cash flow fell 85% to $177 million for the 12 months ended on March 31, compared with $1.15 billion the 12 months ended March 31, 2012. Most of that was due to the company spending $1.4 billion to buy its headquarters campus in downtown Seattle.
Amazon.com regards free cash flow as the key profit metric.
The company offered little information on how its Kindle e-reader is performing. But it said it is making investments in new web-only video content through its Amazon Videos service. Programs include performances by John Goodman, Jeffrey Tambor and Bebe Neuwirth.
North American revenue was up 26% to $9.39 billion; international revenue of $6.70 billion was a gain of 16%.
Shares were down $6.21 to $264.49 after hours after falling to as low as $258. The regular close of $247.70 was up $5.91 on the day.
Starbucks earned 48 cents a share in the quarter, up from 4 cents a year ago. Revenue was up 11.3% to $3.56 billion.
Same-stores sales, a key growth measure, were up 6% from a year ago. European comparable sales were down 1%, as stores struggled in a difficult economy. That was less than expected.
Same-store sales were up 9% in China and Asia, also less than expected. Starbucks opened its first store in Ho Chi Minh City, Vietnam.
Shares were down $1.72 to $58.78. The regular close of $60.50 was up 67 cents.
The earnings came in the midst of a modest but solid market rally. The S&P 500 and the Nasdaq Composite Index ($COMPX) enjoyed their fifth straight session of gains; the Dow Jones Industrials ($INDU) finished up for the fourth time in the last five days.
The Dow closed up 25 points to 14,701. The S&P 500 added 6 points to 1,585, while the Nasdaq rose 20 points to 3,290 after briefly topping 3,300, its 2013 closing high.
Nineteen of the 30 Dow stocks were higher, along with 354 S&P 500 stocks and 76 stocks in the Nasdaq-100 Index ($NDX). The index was up 15 points to 2,489.
Crude oil (-CL) jumped $2.21 to $93.64 a barrel in New York. Gold (-GC) surged $38.30 to $1,462, the biggest one-day gain since Sept. 13 and biggest percentage gain since June 29.
More on Top Stocks
Copyright © 2014 Microsoft. All rights reserved.
Energy companies are lining up for approval to ship an ultralight type of crude called condensate.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.