In the News
28 January 2011 - International [Global]
Amazon
The online retailer, Amazon, has announced its 2010 fourth quarter results. It said that net sales had risen to $12.95 billion compared to $9.52 billion in the equivalent quarter of 2009, a rise of 36 per cent. Its operating income (the profit after expenses such as cost of goods, wages and depreciation) fell back slightly from $476 million to $474 million. Part of the reason for this lower profit was the effect of exchange rate movements, the acquisitions it has made including Lovefilm, which rents DVDs and games and also streams movies, and Diapers.com which sells diapers (nappies in the UK), baby toys and books, clothing and other products targeted at parents of small babies.
The company said that it expected sales to grow between 28 per cent and 39 per cent in the first quarter of 2011 compared to the same period in 2010 and for operating income to fall to between $260 million and $385 million in the quarter largely due again to depreciation but also to stock based compensation - a means of rewarding employees with options to purchase shares at a discounted rate. The fall in its profit margins prompted its shares to slide on the stock market by around nine per cent.
Within the figures, Amazon noted the contribution made by its Kindle e-book reader. It said: "The Company sold millions of third-generation Kindle devices with the new advanced paper-like Pearl e-ink display in the fourth quarter and the third-generation Kindle eclipsed 'Harry Potter and the Deathly Hallows' as the bestselling product in Amazon's history." It also noted that it had sold more Kindle books than paperback books; a rate of 115 Kindle books for every 100 paperbacks it sold across its US markets. When compared to hard-back books, the figure is even more noticeable with Kindle books selling three times the amount of hard-back books. Amazon said that if it included its free Kindle books, such as the New Oxford American Dictionary which is made available to customers who download its Kindle app, the figures would be even higher.