Nothing To Do With The Bakken; One Company With Many Competitors Loses $1 Billion In One Quarter, Shares Up 5%; Another Company With No Real Competitors Reports Earnings Up More Than 200%, Shares Down 6% -- October 27, 2016

Reading headlines can get folks into trouble.

I scanned half a dozen business stories on COP's 3Q16 earnings. There was so much minutiae I guess I missed the part about COP losing a billion -- that's with a "B" -- dollars. At least I think that's what I read. Oh, yes, there it is -- buried in the sixth paragraph over at The Wall Street Journal. I don't know about you, but a loss of $1 billion in one quarter seems a bit extreme, especially when other integrated oil companies are expected to report nice (by comparison), albeit, lower profits.

COP may not be considered an integrated any more, but that's beside the point. 

One would expect COP shares to plummet after that news.

In fact, after announcing to the world that it lost $1 billion in one quarter, COP shares "popped" (as they say on Wall Street) over 5%.

Now, jump over to Amazon, providing a service that really, when you get down to brass tacks, no other company does, or certainly no one does nearly as well. Compare that to COP in which there must be no less than a dozen major competitors all doing the same thing, and a gazillion lessor competitors doing similar things, like crude oil and natural gas exploration and production.

But back to Amazon. The first headline I saw (it was the first headline I saw because I wasn't looking for Amazon stories) said (this was over at Drudge): "Bezos Bomb ... Amazon Miss ... "

Wow, that Drudge "headline" and a scary photo of Jeff Bezos suggested that perhaps Amazon had just gone belly up. So, over to the linked article, over at Financial Times. Did Amazon lose $1 billion this quarter? Did Amazon lose $2 billion this quarter? Based on what Drudge implied or what I inferred I thought the worst: Amazon lost a gazillion billion rubles this quarter.

But no: 

• Amazon reported earnings that were up more than 200% from the same period last year.
• Net income was $252 million. That's a "positive" (in the green) income. Not a loss. Not a billion-dollar loss. Not a two-billion-dollar loss. 
• Revenue from Amazon Web Services soared (their word, not mine) 55%, the biggest year-on-year leap in sales, as prices came down and AWS rolled out new features. 
• Operating margin at AWS increased to almost 32%.

But it gets better.

• Amazon forecasts as much as a 27% increase in holiday sales this year, compared to last year, which I assume was a record then. 
• Amazon expects operating income as high as $1.3 billion in 4Q16 compared with $1.1 billion in 4Q15. 

And it still gets better: Amazon's operating cash flow increased almost 50% for the 12 months ended September, and free cash increased to almost $10 billion. 

COP lost $1 billion this past quarter. It shares "popped" more than 5%.

Amazon's shares: plunged 6% in after-hours trading.

Now why did Amazon have such a bad quarter in which earnings were up 200% and its web services soared 55% and so on? Because it was spending record amounts on building the company to exceed customers' expectations:

• Amazon opened 18 fulfilment centers during this quarter, the biggest growth in its network since 2012;
• and, a whole bunch of other stuff; but,
• you get the point.

Why did COP lose a billion dollars this quarter? Because oil is selling for about $49.

The good news: oil might hit $50 by next year.