Will Amazon prove naysayers wrong - again?

A few years ago, the rap against Amazon.com Inc. (AMZN) was that it was a high-cost, low margin business facing fierce competition from the likes of Wal-Mart Stores Inc. (WMT) and eBay Inc. (EBAY). Now, these naysayers, including yours truly, are singing a different tune.

Analysts are expecting the Seattle-based company to post a year-over-year revenue gain of 15 percent to $4.76 billion, a remarkable achievement considering the precarious financial state of many traditional retailers. Earnings per share is expected to dip to 31 cents per share from 34 cent a year earlier. Estimates range from 26 to 38 cents, according to Thomson Reuters.

The e-commerce giant, which reports earnings after the close of trading today, has been on a tear lately, surging more than 54 percent this year as shoppers snapped up online bargains while avoiding traditional bricks-and-mortar stores. Amazon has successfully diversified beyond books and CDs into areas as diverse as digital media to jewelry. The strategy appears to be working.

During the fourth quarter, Worldwide Media sales grew nine percent to $3.64 billion while Worldwide Electronics & Other General Merchandise sales grew 31 percent to $2.89 billion. How the Kindle electronic book reader plays into these numbers is difficult to say. Last week, Amazon said Kindle sales topped the company's most optimistic projections. Analyst estimate that sales of the $359 device will top $1.2 billion by 2010. Research firm iSuppli estimates that it costs Amazon $185.49 to build the Kindle 2, which was launched in February.

Consumers are clearly shifting their spending habits online. Forrester Research estimates that online sales in the U.S. will grow 11 percent this year to $156.1 billion, down from 13 percent growth last year, according to Bloomberg News. The overall retail picture remains poor. Retail space availability has reached an all-time high, CoStar Group said in a recent report. Overall retail sales were weak in March.

Even eBay Inc., which has been in Wall Street's dog house for years, posted better-than-expected results as consumers seemed to take a liking to the changes to the site made by Chief Executive John Donahue which have outraged some sellers. Overstock.com Inc. (OSTK), whose CEO Patrick Byrne had turned apologizing into an art, posted improved results.

If a rising tide can lift weaker players, Amazon.com is sure to benefit.
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