Amazon 2Q profit falls but results beat Street

Jul 26, 2011 By RACHEL METZ , AP Technology Writer
In this Nov. 11, 2010 photo, Leacroft Green places a package to the correct shipping area at an Amazon.com fulfillment center, in Goodyear, Ariz. Amazon.com Inc., reports quarterly financial results Tuesday, July 26, 2011, after the market close. (AP Photo/Ross D. Franklin, file)

(AP) -- Amazon.com Inc. said Tuesday that its second-quarter profit fell despite a 51 percent jump in revenue as the leading online retailer spent heavily to expand its business.

The results easily beat analyst expectations, as did Amazon's third-quarter sales outlook. Its shares rose 6 percent in after-hours trading.

CEO Jeff Bezos attributed the sales growth to "low prices, expanding selection and innovation."

The growth means Amazon must keep investing in operations expansions and upgrades. So far this year, it has announced it is building 15 new order-filling centers. In a conference call with reporters, Tom Szkutak, Amazon's chief financial officer, said he expects that figure to rise.

Overall, operating expenses rose 54 percent to $9.71 billion.

For the second quarter in a row, this cut into its bottom line. The Seattle-based company earned $191 million, or 41 cents per share, compared with $207 million, or 45 cents per share, in the year-ago quarter.

Revenue rose to $9.91 billion from $6.57 billion last year. Amazon's electronics and general merchandise revenue rose 69 percent to $5.89 billion, while sales of books, CDs, DVDs and other media rose 27 percent to $3.66 billion.

Analysts polled by FactSet were expecting a profit of 34 cents per share on $9.37 billion in revenue.

For the current quarter, Amazon forecast revenue of $10.3 billion to $11.1 billion, the midpoint of which is above the $10.40 billion analysts have been hoping for.

As usual, Amazon did say how many of its Kindle e-readers it sold in the quarter, only indicating that Kindle sales rose when compared with the first three months of the year. During the second quarter, Amazon said it was selling more e-books that it offers for the Kindle than the hardcover and paperback books it carries.

Bezos said the $139 Kindle 3G with Special Offers - a version of the Kindle released during the quarter that is subsidized with ads - is now its top-selling Kindle device.

Speculation is swirling that Amazon may be working on a tablet device to rival Apple Inc.'s popular iPad, but Szkutak would not divulge any details. Many e-readers like the Kindle use screens with "electronic ink" technology that makes them best suited for reading, especially in bright light. Tablets such as the iPad have backlit screens and are intended for functions that go beyond reading text, including surfing the Web, video chatting and watching movies.

"We have a longstanding practice of not talking about what we might or might not do in the future, so you'll have to stay tuned," Szkutak said.

The company also did not give an update on its ongoing battles with states that want online retailers to collect sales taxes on purchases made by their residents.

Amazon shares rose $13.02, or 6.1 percent, to $227.05 in extended trading. The stock finished regular trading up 69 cents at $214.18.

Explore further: India on tap as first market for Microsoft Lumia 535

not rated yet
add to favorites email to friend print save as pdf

Related Stories

Amazon 2Q profit jumps 45 pct; misses Wall Street

Jul 22, 2010

(AP) -- Amazon.com Inc. said Thursday that its second-quarter income jumped, bolstered by shoppers who spent more with the online retailer even as consumer confidence fell overall.

Oracle fiscal 3Q net income up 78 pct

Mar 24, 2011

(AP) -- Database software maker Oracle Corp. said Thursday its net income rose 78 percent in the fiscal third quarter, helped by a rise in new software license sales and the benefit of three full months of ...

TI 2Q revenue rises 42 pct as demand roars back

Jul 19, 2010

(AP) -- Texas Instruments Inc.' second-quarter income and revenue jumped as demand continued to recover after the recession. The company predicted even better results in the new quarter.

Amazon profit up 68 pct; outlook scares investors

Apr 22, 2010

(AP) -- Amazon.com Inc. said Thursday that its first-quarter profit surged 68 percent, showing that consumers are even more comfortable opening their wallets to the online retailer as the economy slowly improves. But investors ...

Amazon 3Q profit jumps 16 percent, but costs rise

Oct 21, 2010

(AP) -- Amazon.com Inc. saw earnings grow in the third quarter as shoppers bought more goods and services, yet costs also rose because the company is having to build new centers to fulfill those orders. Shares ...

Recommended for you

Netflix sues Yahoo CIO for alleged kickbacks

13 hours ago

Netflix is suing a former company vice president who is now chief information officer at Yahoo, accusing him of receiving money from vendors he hired to work with the video streaming company.

BlackBerry courts iPhone users with cash

Nov 25, 2014

Canadian smartphone maker BlackBerry is wooing Apple customers with a cash offer for trade-ins of iPhones for its new square-screened, keyboard-equipped Passport.

HP earnings show continued struggle

Nov 25, 2014

Venerable tech giant Hewlett-Packard has been struggling for three years to turn its business around. Its latest earnings show it still has more work ahead.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.