Amazon Sees Big Jump in Sales, Net Income
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It's a performance that, unlike rival eBay's recent report, wowed on a number of fronts.
Third-quarter net income surged 68 percent to $199 million, or $0.45 per share, compared with $118 million, or $0.27 per share, in the same quarter of 2008. Net sales increased 28 percent to $5.45 billion for Q3, compared to $4.26 billion for the same period last year.
Wall Street analysts had been expecting third-quarter earnings of $0.33 cents per share on $5.03 billion in revenue, according to Thomson Reuters.
The e-commerce giant also reported North America's slice of sales checked in at $2.84 billion, a 23 percent jump from last year's quarter, soundly beating some analyst projections for a 15 percent increase. Overseas, Amazon posted $2.61 billion in sales, up 33 percent from the same period in 2008.
Worldwide media sales grew 17 percent to $2.93 billion, also in line with analysts' expectations.
Leading the charge were healthy sales of its e-reader family of Kindle wireless devices, Amazon CEO Jeff Bezos said, although the company has yet to break out detailed figures for the device.
"Kindle has become the No. 1 bestselling item by both unit sales and dollars -- not just in our electronics store but across all product categories on Amazon.com," Bezos said in a statement.
In response to questions during today's earnings call, CFO Tom Szkutak declined to disclose any information about Kindle sales or the potential for opening up the e-readers to other digital book formats such as EPUB.
The company will have to remain on the offensive in the e-reader sector, however, if it wants to maintain leadership in the increasingly crowded market. The sector has seen the entry of new, competitively priced devices from rivals including Barnes & Noble, iRex Technologies, Spring Design and Sony -- all of whom have an eye on the Kindle
While Amazon does not disclose sales figures for the Kindle, research firm iSuppli has estimated it holds 45 percent of the market, followed by Sony with 30 percent. The company dropped the Kindle price to $299 from $359 in July, followed recently by a further cut to $259. It also introduced a $279 international version of the Kindle.
This reporting period will mark the first complete quarter to include sales of both the Kindle 2, Amazon's front-running wireless e-reader, and its sibling, the Kindle DX, a big-screen model.
Media sales, which encompasses books, movies, video games, music, consoles, software and digital downloads, was another bright spot for Amazon. In the previous quarter, lack of media sales growth alarmed analysts, but it rose 13 percent in North America for Q3, compared to 1 percent in Q2.
The resuscitated media sales, however, weren't due to any one blockbuster category, Szkutak said.
"We don't break out specifics, like video games, but within media we did see acceleration in key categories," he said during the call. "There were better releases in the second half of this quarter than when we saw flat growth, but the lion's share of the increase was not due to new titles but overall contributions."
Amazon remained mum on how some other areas of its business are fairing. With regard to Amazon's Web Services division, Szkutak was similarly optimistic without providing specifics.
"We don't discuss specific results, and it's early with AWS, but we're encouraged with the response we're getting," he said.
Holiday shopping ahead
Looking to the fourth quarter and the critical holiday shopping season, Amazon said it predicts revenue to range between $8.125 billion and $9.125 billion, compared with analysts' expectations for $8.13 billion.
"There is a wide range for fourth-quarter guidance, which reflects all the uncertainties involved," Szkutak added. "That being said, we like what we saw in Q3, we're encouraged, and we're optimistic about for the fourth quarter."
On the acquisition front, Amazon in July said it would buy Zappos in a deal worth about $847 million -- its biggest buyout to date. Amazon, will pay Zappos about 10 million shares of stock, along with $40 million in cash and stock paid to Zappos employees. That transaction will be finalized this fall.