Amazon Earnings Up to $13.18 Billion as Kindle, Books Take Center Stage

amazonBy Jeremy Greenfield, Editorial Director, Digital Book World, @JDGsaid

Fueled by the Kindle Fire, Amazon revenues jumped to $13.18 billion in the first quarter of 2012, a 34% increase over the first quarter in 2011 when Amazon brought in $9.86 billion.

Analysts had expected about $12.91 billion in revenue and slim profit margins from the giant e-tailer and leading e-bookseller.

Net income for the quarter was $130 million, a decrease of 35% from its 2011 first quarter when net income was $201 million.

Per Publishers Lunch, Amazon’s North American media sales were $2.197 billion, up 17% over the same period in 2011, and international media sales were $2.513 billion, up 21%.

In the earnings statement, Amazon founder and CEO Jeff Bezos talked exclusively about books.

“I’m excited to announce that we now have more than 130,000 new, in-copyright books that are exclusive to the Kindle Store – you won’t find them anywhere else. They include many of our top bestsellers – in fact, 16 of our top 100 bestselling titles are exclusive to our store,” said Bezos. “If you’re an Amazon Prime member, you don’t even need to buy these titles – you can borrow them for free – with no due dates – from our revolutionary Kindle Owners’ Lending Library. The Kindle Owners’ Lending Library is heavily used by Kindle owners, and it has extremely unusual features that both authors and customers love. Every time you borrow a book, the author gets paid – and we have an inexhaustible supply of each title so you never have to wait in a queue for the book you want. Kindle is the bestselling e-reader in the world by far, and I assure you we’ll keep working hard so that the Kindle Store remains yet another reason to buy a Kindle!”

Some observers believe that the recent action by the Department of Justice to sue Apple and five of the largest U.S. publishers for colluding to fix e-book prices will greatly benefit Amazon and hurt its biggest rival in the bookselling business, Barnes & Noble.

When asked about the agency pricing model and the Department of Justice case on a conference call with investors and analysts, Amazon chief financial officer Tom Szkutak did not offer much.

“There’s not a lot I can add to your question,” he said, adding, “We do think that the suit is a win for Kindle owners and we look forward to being allowed to lower more prices on Kindle books.”

Powered by the Kindle Fire and third-party re-sellers, Amazon brought in $17.43 billion in revenue in the fourth quarter of 2011, a 35% increase over fourth quarter 2010 revenues.

When asked when the Kindle Fire would be available internationally, Szkutak said that he could not comment but that it was an interesting opportunity for Amazon and that observers should “stay tuned.”

The price of Amazon shares plunged the day after Amazon announced its fourth quarter numbers, falling to $179.46 on February 1 from $194.44 on January 31. The stock recovered, however, reaching a three-month high on March 27 of $205.44. Amazon shares are currently hovering around $194.

In many ways, 2011 was a year of growth for the company. Revenue for 2011 was $48.08 billion, a 41% increase over $34.20 billion in 2010 revenue. Amazon also increased headcount to 56,200 from 33,700 a year ago. Income, however, was down 45% to $630 million from $1.15 billion in 2010 due to investments in infrastructure and technology.

Amazon increased headcount in the first quarter to 65,600 from 56,200 at 2011 year end and up from 37,900 in the first quarter of 2011.

Most of the headcount growth was in customer service and operations and some of the hires had been temporary workers that Amazon brought on to cope with increased activity in the fourth quarter, said Szkutak.

“We’ll moderate it at some point,” he said. “Given the growth we’re experiencing right now, we’re investing to make sure we have the right resources to do that.”

Write to Jeremy Greenfield

3 thoughts on “Amazon Earnings Up to $13.18 Billion as Kindle, Books Take Center Stage

  1. Phil

    I think it’s only a matter of time, Kindle will win out over other electronic book sellers. History shows one format will win when the dust is settled.

    Reply
  2. Jeremy Greenfield Post author

    Thanks for the comment!

    Amazon has been pretty clear about its intention to keep investing in growth. On the conference call last night, one of the analysts (the one from Morgan Stanley, maybe?) asked specifically about that. No surprise in hearing from Amazon that it would continue to invest.

    Reply

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