Amazon Profits Jump 102 Percent


UPDATED: Online-retail giant Amazon (NASDAQ: AMZN) reported brisk second-quarter earnings today, posting profits of 37 cents per share, a $158 million windfall that more than doubled from the same time last year.

With sales of $4.06 billion, up 41 percent from the year-earlier period, Amazon (NASDAQ: AMZN) came in at the high end of its own guidance and beat the Wall Street consensus of $3.96 billion, according to analyst polling by Thomson Reuters.

Amazon’s robust numbers buck the trend of a weakening economic climate that has hurt retailers across the board. Amazon, the world’s largest online retailer, continues to expand, announcing plans to open two new fulfillment centers during the quarter.

In announcing the numbers, CEO Jeff Bezos suggested that his company was better positioned to weather the economic storm than its brick-and-mortar counterparts.

“We suspect that higher fuel prices could be a relative advantage to us. Even just driving 10 miles these days is a couple dollars worth of gasoline,” Bezos said on a conference call with financial analysts. “Our free shipping offers and Amazon Prime are clearly of even more value to customers under that set of circumstances.”

Amazon continued to aggressively promote its Kindle e-book reader in the second quarter. The company does not provide sales figures for the device, but it boasted that it has now made more than 140,000 titles available for the Kindle.

During the second quarter, Amazon mounted a legal challenge to a controversial law that took effect in New York. has joined Amazon’s suit against the state.

But Amazon’s tax troubles might not end there. Through nominal subsidiaries, Amazon runs fulfillment centers and call centers in about a dozen states, but only collects sales taxes in five, counting New York. One of those states — Texas — is undertaking a review of Amazon’s tax responsibilities, and Arizona is considering a change to its tax laws that could impose a collection requirement on the online retailer.

Bezos shrugged off a question about whether Amazon had seen any slackening of its business in New York following the new law, which took effect June 1.

“It’s really too early to comment,” he said, emphasizing that Amazon’s tax existing tax obligations have not hampered its business. “I just want to remind everyone that we [already] collect sales tax or value-added tax on approximately 50 percent of our purchases,” both domestic and foreign.

Also during the quarter, Amazon continued to build its cloud computing business. The company said that more than 30,000 developers signed up for Amazon Web Services, bringing the total number to more than 400,000.

Amazon offered Q3 guidance of between $4.2 billion and $4.425 billion, an increase of between 29 percent and 36 percent over the third quarter of 2007.

Amazon raised slightly its full-year guidance to between $19.35 billion and $20.1 billion.

At press time, shares of Amazon were up nearly 8 percent in after-hours trading to $76.06.

(Updated to include comments from Amazon CEO Jeff Bezos.)

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