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On Thursday 24 July Amazon is expected to announce that its adjusted earnings per share will come in at 0.574, down from the first quarter’s 0.680. During this time sales have dropped from $19.741, down to $19.315, as the company’s pretax profit has fallen to a $71.536 million loss.
The last twelve months have seen mergers and acquisition activity increase, as companies in the telecommunication, media and information sectors continue to blur the lines between businesses. This change in business direction is being driven with the evolving demographics of the consumer. The migration away from hard copies to electronic versions can be seen in a number of different areas like the success of Kindles and increasing number of digital downloads, while sales of CD’s continue to decline.
Amazon has, for the past seven years, benefited from this change and it now accounts for 60% of the e-book market through its Kindle devices. The latest negotiations with book firms have seen Amazon demand the ability to print books directly should suppliers fail to meet consumer requirements quickly enough. Handing over the electronic blueprints of their books has, for the time being, been a step too far for many of the publishers.
Shares in Amazon have performed well ahead of these quarterly figures and now sit above the 50-, 100- and 200-day moving averages. Although this has seen the shares move into overbought territory on the relative strength index, they are still more than 10% off their year highs and should have further scope for improvement. The shares have two initial hurdles to clear first at $38 and then just above $40.