Bezos to investors: Look into my eyes … deeper, deeper … you are getting exuberant ….irrationally exuberant

Scarybezos’s 2006 holiday season was its best ever. Which is a bit hard to believe in light of its fourth-quarter profit. Though sales surged 34 percent to $3.99 billion, the world’s largest Internet retailer saw quarterly profits decline 51 percent thanks to higher taxes and significant increases in operating expenses. It was the eighth consecutive quarter in which Amazon’s earnings have dropped or failed to increase from the year-earlier period, and the company’s failure to temper its free-spending ways is clearly wearing on investors. “I was impressed with the revenue acceleration,” Steve Weinstein of Pacific Crest Securities told the New York Times. “But the margins are a sticky point. It’s just not clear they’re getting the return on their investments.” Amazon’s shares lost more than 3 percent in early trading today, so it’s clear that investors feel the same way, although some would say they’re overreacting. “All in all, it looks like this was a very balanced quarter for Amazon. Media sales were up and electronics sales did well too,” said Robert Toomey, analyst with E.K. Riley Advisors. “Those with a very short view of Amazon can pick apart some issues such as continued gross margin pressure. But those with a long-term view will see that this was a solid quarter. “


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