Online retailing giant Amazon.com has released its financial results for its fourth quarter of 2010, which ended back on December 31. The company is still keeping a tight lip about how many Kindle devices it has sold (using only the term “millions”), but it has divulged another interesting Kindle-related item: sales of Kindle books have now overtaken sales of paperback books on Amazon.com, making the Kindle book the top book format the company sells. Amazon also saw a net 36 percent increase in sales to a whopping $12.95 billing for the fourth quarter, with operating income of $474 million. The overall numbers show Amazon’s business is strong, but the relatively low margin generally failed to impress investors.
The quarter also saw Amazon founder Jeff Bezos reduce his stake in the company from 21.2 percent to 19.5 percent.
“We had our first $10 billion quarter, and after selling millions of third-generation Kindles with the new Pearl e-ink display during the quarter, Kindle books have now overtaken paperback books as the most popular format on Amazon.com,” said Amazon CEO Jeff Bezos, in a statement.
Amazon had previously forecast that Kindle titles might overtake paperback sales in the second quarter of 2011. As surprising as sales of Kindle books surpassing paperback sales more quickly than Amazon estimates is news that Amazon is still seeing growth in paperback sales—apparently, there are circles where reading is still socially acceptable. Since the beginning of 2010, Amazon says it sold 115 Kindle editions for every 100 paperbacks it sold.
Part of the drag on Amazon’s short-term margin are the company’s ongoing activity to bring over a dozen new distribution centers online; Amazon says it plans to launch more distribution centers as well. These costs, in addition to pricing pressures during an aggressive holiday buying season actually means that Amazon’s $474 million profit for the quarter is a slight drop compared to last year.
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