Q2 Preview: Pressure is On as Amazon's (AMZN) Report Could Change the Tone for Tech Earnings

Investors have been selling shares of Amazon.com (Nasdaq: AMZN) over the last four trading sessions, likely positioning themselves ahead of the online retailer's second-quarter report after the market close. While the stock has just turned into the red, the Nasdaq is up 1.3 percent and the DJIA is up 1.6 percent.

Analysts on Wall Street are looking for Amazon.com to report a quarterly profit of just 2 cents per share. Sales are expected to be a touch under $12.9 billion. The company posted earnings of 28 cents per share during the first quarter of 2012 and EPS of 42 cents during the second quarter of 2011.

With misses from hot tech names Apple (Nasdaq: AAPL) and Zynga (Nasdaq: ZNGA) this week, traders will be looking to Amazon for some more insight into Techland. Even more, with most investors probably agreeing RIM (Nasdaq: RIMM) should no longer be considered one of the "Four Horsemen of Tech" (formerly AAPL, GOOG, AMZN, RIMM), and with Google (Nasdaq: GOOG) recently topping the Street's Q2 estimates, Amazon's report could be the largest component left to help decide the fate of tech for this quarter. The tech sector has been holding up relatively well (the XLF ETF is down about 4.5 percent since the beginning of May, compared to 6-plus percent declines in the XLF and XRT), however, a dismal tone from Amazon could quickly change that.

According to our Analyst Ratings page for Amazon.com, 21 sell-side analysts have a Buy rating on the stock into the quarterly report, 12 have a Neutral, and none have a Sell rating.

Lets take a look at some analyst commentary:

• Goldman Sachs - The firm's report is entitled "moving in the right direction." Goldman sees inline sales "despite a qoq FX headwind of $140mn and macro pressures in Europe..."
  
  Goldman is looking for third-quarter sales guidance to be in the range of $12.94-$14.36 billion, which implies growth of about 19-32 percent. The firm is modeling for Amazon to guide consolidated segment operating income to the range of $0-$300 million for the third quarter in a row. "Based on manufacturing delays, we now see 8.3mn Kindle eReaders in 2012 (down 50% yoy). As a result, we are reducing our forecast for eBook revenue in 2013 by $2.1bn," according to Goldman.
  
  Maintains Buy rating and $280 price target.
  
  
• Wedbush - The firm said "Amazon faces its most difficult comparisons of the year across nearly all of its categories in addition to ongoing macroeconomic headwinds." Still, Wedbush is projecting sales to be up 30 percent from last year, "aided by 38% growth in Electronics revenue, reflecting resilient global ecommerce demand and continued strength in third-party (3P) unit sales."
  
  Wedbush believes "global ecommerce growth remained fairly resilient through 2Q12." The firm is modeling for moderating ecommerce growth during the second half of this year, Wedbush sees the US and EU possibly growing in the low-mid teens range over 2012. "We suspect the secular shift from offline to online may be getting more pronounced as the economic slowdown appears to be having a greater impact on traditional retailers."
  
  Maintains Buy rating and $260 price target.

Amazon.com generally reports just a minute or two after the closing bell rings. Tune into our Earnings category before 4pm ET to get all the latest breaking news within seconds.

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