Seattle Times: Solid Earnings Mixed With Caution for Amazon

Free shipping is cited in large part for increased sales volumes that have lead to Amazon's first profitable quarter outside of the Christmas holiday season. Reporting yesterday, the online retail bellwether chalked up a modest net profit of $15.6 million, or 4 cents a share, on revenue of $1.1 billion, up 33 percent from the same quarter last year. Still, Wall Street punished its stock, which fell 24 cents to close at $59.35, and dropped another $1.27 in after-hours trading on the NASDAQ. The company reported it financial results after the markets closed.

The problem seems to be that Amazon's performance is too good. The Seattle Times reports:

"These guys really haven't disappointed over the last couple of years," said Dan Geiman, an analyst with McAdams, Wright Ragen in Seattle. "It's kind of heightened expectations going forward."

Amazon's stock has appreciated six-fold in the past two years, spanking shortsellers who had long since given the company up for dead.