We have been bearish on AMZN.
The margin picture has cast a pall of gloom in Q4 results. The fourth quarter gross margin at 20.6% was below the 21.3% reported a year earlier and 23.4% in Q3 (and 24.3% in Q2 - indicating a declining trend). The non GAAP operating margin came at 5.8%, below many of the Streets projections which were above 6%. The mid-point of the operating income guidance for 2008, at $785M-$985M, fell below the analyst projection of $958.4M.
The stock dropped 4.3% on Feb 28, and is testing the support at $68 levels. We maintain our bearish view.
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