Amazon’s Q4 report: profits down by 45%, sales up by 22%

Judging by Amazon’s fourth quarter report, things aren’t all that peachy at the internet giant. The company reported less than impressive results with net income falling 45% to US$97-million in the fourth quarter, or US$0.21 per diluted share, compared with US$177-million, or $0.38 per diluted share, in the fourth quarter 2011.

The online retailer saw a 22% increase in net sales to US$21.27-billion in the fourth quarter, compared with US$17.43-billion in the fourth quarter 2011. Of course analysts had high expectations for the company due to the holiday period shopping. Though the company missed analysts’ predictions for this quarter, the earnings report saw its stock trade higher in after hours trading.

“We’re now seeing the transition we’ve been expecting,” said Jeff Bezos, founder and CEO of Amazon.com. “After five years, eBooks is a multi-billion dollar category for us and growing fast — up approximately 70% last year. In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5%. We’re excited and very grateful to our customers for their response to Kindle and our ever-expanding ecosystem and selection.”

Happy moments came for the company with an operating income increase of 56% to US$405 million in the fourth quarter, compared with US$260 million in the fourth quarter 2011. This means the company currently has US$8-billion in cash.

The eBook business is booming for Amazon, which is up 70% but the company is still not disclosing its Kindle sales figures. Though the online retailer noted that the Kindle Fire HD was the best-selling product on its site for the year, followed by the Kindle Fire, Kindle Paperwhite and regular Kindle.

See the report highlight below.

Highlights

• For the second year in a row, Amazon’s tablet was the most popular item for customers – Kindle Fire HD continued its run as the #1 best-selling, most gifted, and most wished for product across the millions of items available on Amazon worldwide. At year-end, Kindle Fire HD, Kindle Fire, Kindle Paperwhite and Kindle held the top four spots on the Amazon worldwide best seller charts since launch.
• Amazon announced the launch of AutoRip, a new service that gives customers free MP3 versions of CDs they purchase from Amazon. Additionally, customers who have purchased AutoRip CDs at any time since Amazon first opened its Music Store in 1998 will find MP3 versions of those albums in their Cloud Player libraries – also automatically and for free.
• Amazon introduced Kindle FreeTime Unlimited, bringing together for the first time all of the types of content kids and parents love – books, games, educational apps, movies and TV shows – into one simple, unlimited, easy-to-use service for kids ages 3-8.
• Amazon’s digital media selection has grown to over 23 million movies, TV shows, songs, magazines, books, audiobooks, and popular apps and games in 2012, an increase from 19 million at year-end 2011.
• Amazon.com announced new licensing agreements with Turner Broadcasting, Warner Bros. Domestic Television Distribution, and A+E Networks, for popular television series including Falling Skies, The Closer, Pawn Stars, Storage Wars, and Dance Moms, expanding its catalog of title offerings for Prime Instant Video to more than 36,000 movies and television episodes.
• Amazon launched Kindle Stores for Brazil, Canada, China, and Japan, with a large selection of the most popular books, including thousands of local-language books.
• Amazon announced that 23 KDP authors each sold over 250,000 copies of their books in 2012, and that over 500 KDP Select books have reached the top 100 Kindle best seller lists around the world.
• Amazon announced that for the eighth consecutive year, the company ranks #1 in customer satisfaction during the holiday shopping season according to the ForeSee annual Holiday E-Retail Satisfaction Index. ForeSee surveyed over 24,000 customers between Thanksgiving and Christmas, asking them to rate their satisfaction with the top 100 retailers. For the second year in a row,
• Amazon’s score of 88 is the highest ever attained by any retailer in the study.
• Amazon Web Services (AWS) announced the launch of its newest Asia-Pacific Region in Sydney, Australia, now available for multiple services including Amazon Elastic Compute Cloud (EC2), Amazon Simple Storage Service (S3), and Amazon Relational Database Service (RDS). Sydney joins Singapore and Tokyo as the third Region in Asia-Pacific and the ninth Region worldwide.
• AWS announced that SAP Business Suite is now certified to run on the AWS cloud platform. Enterprises running SAP Business Suite can now leverage the on-demand, pay as you go AWS platform to support thousands of concurrent users in production without making costly capital expenditures for their underlying infrastructure. AWS also announced that SAP HANA, SAP’s in-memory database and platform, is certified to run on AWS and is available for purchase via AWS Marketplace.
• AWS continued its rapid pace of innovation by launching 159 new services and features in 2012. This is nearly double the services and features launched in 2011.
• AWS has lowered prices 24 times since it launched in 2006, including 10 price reductions in 2012.