Amazon 2Q profit jumps 45 pct; misses Wall Street

Jul 22, 2010 By RACHEL METZ , AP Technology Writer
In this file photo made May 25, 2010, Amazon.com Inc. CEO and founder Jeff Bezos speaks during the company's shareholders meeting in Seattle. Amazon.com Inc. said Thursday, July 22, 2010, that its second-quarter income jumped, bolstered by shoppers who spent more with the online retailer even as consumer confidence fell overall. (AP Photo/Ted S. Warren, File)

(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.

But the Seattle-based company's earnings fell below analyst expectations, and its stock dove in after-hours trading.

For the April-June quarter, Amazon.com earned $207 million, or 45 cents per share. That's a 45 percent increase from $142 million, or 32 cents per share, in the same quarter last year.

Analysts polled by Thomson Reuters were looking for 54 cents per share, but rising operating expenses cut into Amazon's profit growth.

Overall, operating expenses grew 40 percent to $6.3 billion. Part of that resulted from rising fulfillment costs - $582 million, compared with $409 million last year.

In a conference call with journalists to discuss the company's results, Chief Financial Officer Tom Szkutak attributed the expenses to Amazon's efforts at increasing its ability to fill orders. The company is adding 13 fulfillment centers this year, he said, and hired 2,200 people during the quarter.

Revenue grew 41 percent to $6.6 billion, slightly beating analyst predictions for $6.5 billion in revenue.

The growth came mainly from sales of electronics and other general merchandise, which increased 69 percent from last year to $3.5 billion. Revenue from books, CDs, DVDs and other media rose 18 percent to $2.9 billion.

Revenue increased 46 percent in North America to $3.6 billion, and 35 percent to $3 billion elsewhere.

As usual, Amazon did not provide details about sales of its Kindle e-reader, which was joined in the second quarter by a formidable competitor, Apple Inc.'s iPad. In a statement, CEO Jeff Bezos said Amazon is seeing "rapid growth" in Kindle sales, among other company offerings.

Earlier this week, Amazon did say that Kindle sales have risen since it cut its price in June. To push more Kindle sales, Amazon dropped the price of the Kindle by $70, to $189, just hours after Barnes & Noble Inc. said it would lower the price of its competing Nook e-reader by $60, to $199. Amazon also started selling the Kindle at Target stores.

Bezos also said Thursday that in the past year, consumers have bought more than $1 billion worth of goods from Amazon with a mobile device. This includes digital purchases made over the Kindle, which can download content wirelessly.

In the current quarter, Amazon believes revenue will total $6.9 billion to $7.6 billion, which would mark growth of 27 percent to 40 percent over the third quarter of 2009. Analysts expect $7.1 billion in revenue.

The stock fell $15.82, or 13.2 percent, to $104.25 in extended trading. Before the release of results, the stock rose $2.64, or 2.25 percent, to close at $120.07.

Explore further: Media reaping profits from Internet (Update)

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

Related Stories

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 ...

Consumers still flock to Amazon: income up 62 pct

Oct 22, 2009

(AP) -- Amazon.com Inc. said Thursday that its third-quarter earnings soared 62 percent, showing that consumers are comfortable opening their wallets to the online retailer despite the still-shaky economy.

Amazon 2Q profit falls with Toys R Us settlement

Jul 23, 2009

(AP) -- Amazon.com Inc. said Thursday that its second-quarter earnings fell while sales rose, due to a $51 million payment to settle a long-standing dispute with former partner Toys R Us. The profit still beat Wall Street ...

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.

Recommended for you

Alibaba post-IPO structure gives insiders control

21 minutes ago

Control over Alibaba Group will stay in the hands of founder Jack Ma and other company veterans after the Chinese e-commerce giant goes public on the New York Stock Exchange in a record busting share sale.

User comments : 0