| Amazon's Profit Soars 71% on Strong Holiday Sales |
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29/01/2010 11:21 (740 Day 03:58 minutes ago) | |||||
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The FINANCIAL -- Amazon.com Inc., the world’s largest Internet retailer, reported fourth-quarter profit and sales that beat analysts’ estimates thanks to strong holiday sales.
Amazon said it earned $384 million, or 85 cents per share. That compares with $225 million, or 52 cents per share, in the year-earlier quarter, according to Boston. Revenue rose 42 percent, to $9.52 billion. That includes a $200 million contribution from online shoe and apparel store Zappos, which Amazon bought last year. Analysts polled by Thomson Reuters expected earnings of 72 cents per share on $9.04 billion in revenue.
Holiday sales at Internet retailers outpaced spending at traditional stores as consumers flocked to the Web to find bargains and take advantage of free shipping. Amazon.com has gained market share over rivals like eBay, according to Forrester Research, Bloomberg reports. “It was a good quarter,” said Colin Gillis, an analyst at BGC Financial in New York. Still, the results failed to exceed some of the most optimistic estimates, which explained a temporary drop in the shares after the report, he said. “The U.S. consumer is still under a fair amount of pressure.”
Amazon.com, which is based in Seattle, rose as much as $2.78, or 2.2 percent, to $128.45 in late trading after closing at $125.67, according to the same source. Amazon predicted first-quarter sales of $6.45 billion to $7 billion. Analysts predicted $6.42 billion. The company forecast operating income of $275 million to $365 million. Analysts estimated $341.3 million, according to a Bloomberg survey.
Sales from international operations, including those in the U.K., Germany, Japan, France and China, rose 48 percent to $4.56 billion, accounting for 48 percent of revenue, Amazon.com said, Business Week reports. Global media sales, which includes books and digital music, advanced 29 percent to $4.68 billion in the quarter. Before foreign exchange fluctuations, the growth rate was 23 percent.
“There’s a recovery going on,” said Gillis, according to the same source. “Amazon is assisted by the tailwinds of e-commerce. The degree that the U.S. consumer is going to come roaring back remains to be seen.”
While Amazon hasn't released sales data for its Kindle business, it will likely contribute $980 million in revenue and $250 million in gross profit in 2010, estimates Sandeep Aggarwal, an analyst at brokers Collins Stewart, The Wall Street Journal informs. Among more than 40 e-reading devices that rival the Kindle, "Apple is so far the most compelling, competitive threat," said Aggarwal.
The company reported that when it has both paper editions and digital editions of books, it sells six Kindle books for every 10 paper books, according to the same source. Amazon faces very high expectations from investors, who have boosted the price of its shares nearly 150% over the last 12 months, and some 30% since its third quarter earnings report. In late trading on the Nasdaq Stock Market, Amazon gained about 2% to $128.70, after closing up nearly 3% at $126.03.
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