Amazon.com reported a strong 3rd quarter with profits up 48%. This profit of $118 million included a $15 million foreign currency benefit. The stock did take a hit because Amazon indicated that the economic downturn would affect its earnings and cut outlook for the year – predicting lower revenue for 2008, and also saying that revenue growth slowed down in the end of the 3rd quarter.
Revenue rose almost 31 percent to $4.26 billion with book, CD and DVD sales rising 19 percent to $2.49 billion, and sales of electronics and other merchandise jumping 52 percent to $1.64 billion.
Also, significantly,
Szkutak mentioned in the conference call that sales of the company’s wireless e-reader device, Kindle, “have significantly exceeded our expectations” and that sales of digital Kindle book titles account for more than 10 percent of all Amazon’s book sales.
Take a look at that figure again – sales of digital Kindle book titles account for more than 10% of all Amazon’s book sales. That is insane. In fact I’m going to check on that and update to confirm this because it just sounds insane.
And some more snippets from an excellent article covering the reportings call -
Bezos gave voice to that spirit while talking up the Kindle … “One of our competitive advantages at Amazon is that we are willing to plant seeds — if we think the seed is important — and nurture it for a long time,” Bezos said.
The third quarter also saw Amazon continue its drive into the digital media sector, revamping its streaming media service with a slick interface and impressive lineup of content.
Amazon continues to chase Apple (NASDAQ: APPL) in the music-retail market, enjoying the benefit of licensing agreements with the four major record labels to offer their catalogs free from copy and usage restrictions.
The company also struck an innovative advertising partnership with TiVo(NASDAQ: TIVO), where viewers will see menus appear on their screens advertising links to purchase songs or merchandise featured in a TV show from Amazon’s store.
The partnership with Tivo is rather interesting. I’m sure we’ll be hearing more on that soon.
Another Kindle related snippet from the call (this is Mr. Bezos responding to a question) -
“Simply put, the prices of books will be cheaper. Most Kindle items are $9.99 now. We would hope to sell many more units, even if we make less money per unit, that would be the basis of strong business.” As for whether Kindle might be cannibalistic, Szkutak added: “Kindle’s affect is additive to physical book units. Post the purchase of a Kindle, owners buy 1.6 times as many book titles and the same amount of physical books.”
Filed under: kindle Tagged: | amazon 3rd quarter 2008, amazon earnings
