Emerging Tech

Amazon says Kindle sales tripled during holidays


Amazon.com has announced its financial results for the fourth quarter of 2011, and on the surface the numbers are rosey: sales were up 35 percent compared to a year ago to a whopping $17.43 billion, and Kindle device sales—across all Kindle devices, ereaders and the Fire tablet—were nearly triple last year’s total. However, the investment community isn’t terribly excited with Amazon’s performance because the company’s net income declined year-on-year…and the company warned it might even post a loss next quarter as it invests in expanding its Kindle and cloud services platforms.

“We are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices this holiday season, making Kindle our bestselling product across both the U.S. and Europe,” said Amazon founder and CEO Jeff Bezos, in a statement.

As usual, Amazon did not reveal how many Kindles it sold. Some industry estimates put the number of Kindle Fire tablets picked up by consumers this holiday season as high as six million, which would make the Kindle Fire the first serious competitor to the Apple iPad. However, any success of the Kindle Fire is diminished by Amazon’s decreased operating income and warnings it is going to invest in its operations rather than kick money to investors. Amazon’s operating income for the fourth quarter was $260 million (compared to $474 million a year ago), with net income down to $177 million in the same period—that’s down 58 percent compared to a year ago.

Looking ahead, Amazon says it expects net sales for the first quarter of 2012 to be between $12 billion and $13.4 billion—but despite those heady numbers the company might chalk up a first quarter loss of as much as $200 million. The forecast has caused Amazon shares to decline sharply in initial trading after the announcement, as investors express concern over the amount Amazon will be investing in expanding its services.

A bright spot on Amazon’s balance sheet was the number of third party sellers using Amazon services: overall, they saw a 65 percent year-on-year increase in the number of units they sold to Amazon customers, and now account for 36 percent of total units Amazon sells. Third-party retailers marketing through Amazon have a higher profit margin than goods Amazon sells itself: Amazon gets a 5 to 15 percent cut of the sale, but doesn’t have to deal with the costs of warehousing and delivering products.

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