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Amazon earnings: it’s all about their spending habits

Hot Stock Minute

Amazon (AMZN) will attract a lot of attention as it gets set to report earnings after the close today.

Analysts expect the e-commerce giant to report a loss of $0.15 per share, compared to a loss of $0.02 a share a year ago. Revenue is expected to rise 23% to $19.34 billion.

Amazon’s core retail business is expected to perform well, said Yahoo Finance Senior Columnist Michael Santoli. What everyone is watching is how much money they are investing; not on the retail side but on the web services front, and what they are getting back in terms of revenue and profits from it, Santoli said.

Earlier this week, Citigroup downgraded Amazon’s stock to neutral from buy and cut its price target to $395 from $414. The financial firm said an April price cut for Amazon Web Services - its cloud-computing service - is likely to impact the company for two to three quarters.

Amazon, which is looking to dominate just about everything you buy, made a big play into the consumer-electronics market with the debut of its Fire TV set-top in April and the Fire smartphone launch in June. However, Amazon’s smartphone has not received rave reviews. "Clearly the idea of devices as some kind of big growth accelerator for Amazon doesn’t necessarily mean it’s going to pan out," Santoli said. Amazon is not a formidable player in the consumer electronics space. The new products are just a way to help consumers tap into the company's broader services like Amazon Prime, he said. 

As of Wednesday’s close shares of Amazon are down 10% percent so far this year, but the stock is still up close to 20% over the past 12 months.