Amazon profit falls but sales higher
July 26, 2005 08:38 PM ET

SAN FRANCISCO (Reuters) - Amazon.com Inc. on Tuesday posted a 32 percent drop in quarterly profit due in part to higher tax expenses, but the online retailer beat Wall Street targets as a new discount shipping program, although costly, drove sales higher.

When a company reports significantly lower profits because it has been giving away products and services in order to boost top line growth, it usually leads to a falling stock price. The problem is that stock promotion, combined with misleading headlines in the mass media, moves markets in crazy ways, at least for a time.

Today Amazon (NDQ: AMZN) is up about +11.7 pct at the open after publishing results that I find to be underwhelming to say the least. In fact, I find Amazon to be an underwhelming company. One serious look at the financial data tells you all you need to know. This is one company that will not likely ever make it into the Cara Global 100 Best Companies list, unless of course I happen to be rating it based on Jeff Bezos' yuk-yuk routine.

Technically, AMZN stock looks to be bumping up against a very long-term down sloping trend line. Could this be the turn?

Under other circumstances, I might be a believer in the chart. But if the U.S. equity market completes its summer rally soon, I expect AMZN to be among the leaders on the downside.

The extreme buying pressure after the close last evening, and again this morning, simply leaves me scratching my head.