Amazon (AMZN) and Microsoft (MSFT) Both Rally Afterhours
Microsoft Sells Less
For the first time in 23 years of being a public company Microsoft was unable to increase their revenue from last year's third quarter to this year's third quarter. Microsoft was still able to earn $2.98 billion in the quarter and was able to contain costs more than it had in prior quarters which is some of the reason for the after the close bounce. The profit matched analysts' expectations and many feel this is a good sign seeing as the global slow down could have affected the company more than it did.
Microsoft stock has moved off the very bottom of it's recent range with the overall market improving but has been stuck near $19 a share. The stock's forward looking P/E ratio matches it's expected growth rate of 10% for next year which means the stock will probably hover near this level until there is an improvement in revenue and earnings.
Amazon Beats on Earnings and Profit
Amazon was able to beat on both earnings and profit tonight in the extended trading period causing the stock to move 2.68% higher after a decent 1.78% move during the day. The stock has moved nicely during the past three months from roughly $50 a share to $80.61 a share today. Two reasons are stated for the good numbers, consumer shopping for deals at the online retailers site and the growth of the company's electronic book reader, Kindle.
Amazon has a forward looking price to earnings ratio of 42 at this time which doesn't match well with it's slower growth rate of 27% for next year. Sales are growing even slower at around 15%. I would avoid Amazon at this time even after the nice earnings report. The overall markets should get a lift tomorrow which will help the index ETFs such as the SSO which I have been long for some time.