Amazon will announce their earnings later today. As I outlined in October, the results this past quarter will highlight the difference between Apple and Amazon.
Writes Tricia Duryee:
Here’s one data point: For the holiday period, Apple’s gross margin was an impressive 44.7 percent, up from 38.5 percent a year earlier. Meanwhile, analysts are estimating that Amazon’s operating margin will fall to 1.3 percent from 3.6 percent last year.
44.7 percent versus 1.3 percent.
What does that mean? It means that even though Amazon should report record revenues, their profit will likely be depressed — probably badly depressed. Why? 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.
Like Apple, Amazon has built an amazing business that has revolutionized more than one industry. But context is important. Right now, Apple probably makes more profit in a day than Amazon does in a quarter.
Update: The numbers are out.