Amazon Net Sales Increases, Profits Decline 58%

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[By Sudarshana Banerjee]

Amazon.com has announced financial results for its fourth quarter ended December 31, 2011. Amazon’s operating cash flow increased 12 per cent to $3.90 billion for the trailing twelve months, compared with $3.50 billion for the trailing twelve months ended December 31, 2010. Free cash flow decreased 17 per cent to $2.09 billion for the trailing twelve months, compared with $2.52 billion for the previous year.

Amazon’s net sales increased 35 per cent to $17.43 billion in the fourth quarter, compared with $12.95 billion in fourth quarter 2010. Excluding the $101 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 34% compared with fourth quarter 2010.

Operating income was $260 million in the fourth quarter, compared with $474 million in fourth quarter 2010. Net income decreased 58 per cent to $177 million in the fourth quarter, or 38 cents per share, compared with net income of $416 million, or 91 cents per share, in the same period last year.

Jeff Bezos (Founder and CEO, Amazon.com): Our millions of third-party sellers had a tremendous holiday season with 65 per cent unit growth and now represent 36 per cent of total units sold.

Full Year 2011: Amazon’s net sales increased 41 per cent to $48.08 billion, compared with $34.20 billion in 2010. Operating income decreased 39 per cent to $862 million, compared with $1.41 billion in 2010. Net income decreased 45 per cent to $631 million in 2011, or $1.37 per diluted share, compared with net income of $1.15 billion, or $2.53 per diluted share, in 2010.

 

More Highlights

  • North America segment sales, representing the Company’s U.S. and Canadian sites, were $9.90 billion, up 37 per cent from fourth quarter 2010. International segment sales, representing the Company’s U.K., German, Japanese, French, Chinese, Italian and Spanish sites, were $7.53 billion, up 31 per cent from fourth quarter 2010.
  • Worldwide Media sales grew 15 per cent to $6.01 billion.
  • Worldwide Electronics and Other General Merchandise sales grew 48 per cent to $10.91 billion.
  • During the nine-week holiday period ending December 31, 2011, Kindle unit sales, including both the Kindle Fire and e-reader devices, increased 177 per cent over the same period last year.
  • Amazon launched Kindle Stores at Amazon.it and Amazon.es. Kindle moved to the top of the bestseller list on launch day in both countries and held the top spot this holiday season. The new Kindle was also the bestselling product on Amazon.co.uk, Amazon.de and Amazon.fr.
  • Kindle Direct Publishing (KDP) announced KDP Select, an annual fund of at least $6 million dedicated to independent authors and publishers who participate in the Kindle Owners’ Lending Library. In December alone, customers borrowed 295,000 KDP Select titles, and KDP Select has helped grow the total library selection of books by over 16X.
  • Amazon expanded its catalog of title offerings for Prime Instant Video, announcing licensing agreements with Twentieth Century Fox Television Distribution, which added the FOX and FX television shows Glee and Sons of Anarchy, and Disney-ABC Television, which added television shows including Lost and Grey’s Anatomy. These deals bring the total number of Prime Instant Videos to more than 13,000 movies and TV shows from partners such as CBS, Fox, NBCUniversal, Sony, Warner Bros., PBS, ABC-Disney and other.
  • The number of videos purchased or rented from Amazon Instant Video and the number of Amazon Instant Video customers both more than doubled year-over-year in the fourth quarter. In addition, the number of Prime Instant Video streams increased nearly 300 per cent in the fourth quarter compared to the third quarter.
  • Amazon Appstore for Android customers nearly tripled in the fourth quarter compared to the third quarter. In addition, customers downloaded more apps from the Amazon Appstore during the fourth quarter than they had during all previous quarters combined.
  • Amazon Web Services (AWS) announced the launch of its new South America (Sao Paulo) Region and U.S. West (Oregon) Region, bringing the total to eight geographic regions worldwide to which the company has deployed its global cloud computing services.

First Quarter 2012 Guidance: Net sales are expected to be between $12.0 billion and $13.4 billion, or to grow between 22 per cent and 36 per cent compared with first quarter 2011. Operating income (loss) is expected to be between $200 million and $100 million, or between 162 per cent decline and 69 per cent decline compared with first quarter 2011.