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What to watch from Amazon today

Amazon is set to report earnings Thursday, with analysts watching to see if the company can improve its historically thin profit margins.

Part of the firm’s success over the years has depended precisely on those thin profit margins and the promise that Amazon’s investment in infrastructure and hardware will deliver profit over time.

But Colin Gilli of BGC Partners said in a preview note Wednesday that investors may be running out of patience. The clock is ticking, Gilli said, “for Amazon to show it can sell its goods and services while making a profit” that justifies its market capitalization.

Analysts estimate that the company will report second-quarter earnings of 5 cents per share on $15.73 billion in revenue and a 22 percent growth in sales, according to a poll by Thomson Finance. In the same period last year, the company reported earnings of 1 cent per share on $12.83 billion in revenue.

That fairly rosy forecast indicates that Wall Street expects Amazon has fared better than others in the e-commerce space over the past few months. Last week’s earnings reports from eBay and Google both showed weaker-than-expected sales in Europe.

Looking ahead, Amazon has been aggressive about beefing up its multimedia content. The firm has been striking deals with studios such as Viacom for exclusive content for its Amazon Instant Video service. The move is aimed at enticing more consumers to buy Amazon’s Kindle tablets and at keeping customers who would continue to buy its products.

Amazon investors may also be keeping an ear tuned after chatter that Amazon is considering a move into a new industry altogether — grocery delivery. According to a report from Reuters in June, the firm was plotting a “major roll-out” of grocery services and will expand its AmazonFresh program. That service, which delivers fresh produce to customers, is only available near the firm’s home base in Seattle.

Company shares were up about 3 percent on the upbeat estimates in afternoon trading Thursday, at a share price of $302.36.

Related stories:

Why Amazon bought GoodReads

The Style Blog: ‘New’ releases from Amazon see into the future

Apple e-books: Highlights from the judge’s ruling

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Hayley Tsukayama covers consumer technology for The Washington Post.
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