Money Matters, Simplified.
Amazon.com reports surge in revenue, income
by Jamie Anderson - January 29, 2010 - comments
Amazon has lived up to the expectation of its shareholders who have boosted the price of its shares nearly 150 percent over the last one year, and some close to 30 percent since the retailers’ third quarter earnings report.
Seattle, January 29 -- During the holiday discounts and free shipping, shoppers made merry and so did Amazon.com.
The world's largest online retailer emerged as a clear winner when it reported fourth quarter profit and sales that surpassed analysts’ estimates.
The fantastic results
The Seattle based organization registered a whopping 71 percent growth in net income in the last quarter of the year, which can safely be termed as a blockbuster quarter for the retailer.
At a time when most other retailer took a beating due to the recessionary forces operating in the world economy, Amazon managed to expand its share of American retail.
The 42 percent spike in media and electronics sales proved to be a major factor in the success of the behemoth.
Amazon's revenue for the period ended Dec. 31 rose to $9.52 billion from $6.70 billion.
Meanwhile, the income in during the same period rose to $384 million, up from $225 million a year ago.
With "the growth we have experienced, we were able to take that growth and then leverage our cost structure to deliver the improvements on operating margin," said Mr. Tom Szkutak, Amazon chief financial officer.
The company is contemplating a buyback of $2 billion of its stock. The buyback has no expiration, Amazon.com clarified.
The Kindle effect
While Amazon did not divulge the sales data for the ‘Kindles’ claiming that the devices produce a very small fraction of overall revenues, experts opine that the Kindle business is massive as Chief Executive Officer Jeff Bezos already claimed, “Millions of people now own Kindles.”
Analysts expect that the business is likely to contribute $980 million in revenue and $250 million in gross profit for Amazon in 2010.
Sandeep Aggarwal, an analyst at brokers Collins Stewart opined that Apple Inc. poses a real threat to Kindle. The other 40 odd e-reading devices are primarily ‘also rans’ in the market.
"Apple is so far the most compelling, competitive threat," said Mr. Aggarwal. And rightly so!
“Amazon’s done a great job of pioneering this functionality with the Kindle. We’re going to stand on their shoulders and go a little further,” challenges Apple’s Steve Jobs.
About Amazon.com
Founded in 1994 by Jeffrey P. Bezos, a former financial analyst for the New York hedge fund D.E. Shaw & Company who, the online retail behemoth began operations as an online bookstore.
Books turned out to be the building blocks and laid the foundation for an immensely successful empire. That is what Amazon.com is today.
Known for its reputation for good prices, broad selection and convenience, Amazon sells a huge repertoire of product categories. From nappies to exclusive designer wear, from toys to consumer durables, from groceries to furniture, Amazon has it all.