Amazon shares are surging after announcing net income of $130 million or $0.28 per share.
Analysts were looking for $0.07.
According to Amazon’s income statement, $89 million of net income came from equity-method investment activity.
In a nutshell, if a company owns less than 50% of another company, it will record its share of that other company’s net income as an equity-method investment line item.
According to Amazon’s latest 10-K, equity method investments included a 31% share of LivingSocial.
Photo: Amazon’s 2011 10-K
Equity-method investment income accounted for around $0.19. If that generated no income, then Amazon would’ve reported EPS of around $0.09, which is still ahead of the $0.07 that analysts were expecting.