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Amazon’s ‘Millions’ of Kindles Are Drop In $9.5 Billion Sales Bucket; App Will Be On iPad

Jeff Bezos doesn’t mind telling analysts and investors millions of people own Kindles. How many have been sold? That’s another question. Despite a Q4 earnings report top heavy with Kindle factoids, the e-reader is still too small a part of the company’s sales to break out as a separate number. That’s not a reflection on the Kindle: a few million e-readers is a small line item in a company with $9.5 billion in net sales for Q409. So Amazon (NSDQ: AMZN) doesn’t have to say how Kindle is really selling. Unfortunately.

Amazon does have plenty of other numbers in an earnings report that may also play up just how nasty last year was for so many companies: that $9.5 billion in net sales is up 42 percent over $670 million in Q408. Even without a $354 million favorable impact from foreign exchange rates changes, the increase would be a striking 37 percent. Zappos, the retails company acquired last year, added $200 million to Q4 revenue. Amazon’s net income rose 71 percent over Q408, to $0.85 per share from $225 million, or $0.52 per share in Q408. (Analysts polled by Thomson Reuters (NYSE: TRI) expected earnings of $0.72 per share on revenue of $9.04 billion. The impressive results helped Amazon avoid a post-iPad announcement slump: shares are trading up after hours.

Earnings call: Bezos made a cameo appearance in the press release but not for the call. That’s not unusual but it’s more fun when he’s on. CFO Tom Szkutak explained some accounting changes in the way Kindle will be recognized going forward: Sales are “considered arrangements with multiple elements which include the device, wireless connectivity and software upgrades.” Device revenue, which is the a “substantial portion” of the total price will be recognized on delivery. Revenue for the Whispersync wireless connectivity and software upgrades will still be amortized over the estimated two-year life of the device. Amazon had amortized about $500 million of deferred revenue between 201 and 2011.

Media sales and competition: Media revenues were up 26 percent but analysts expressed some concern about the ability to sustain substantial growth with increasing competition, particularly on the e-book side. Szkutak: “We think we are positioned very nicely from a digital perspective. … We think we are focused on the customer and I think Kindle is certainly a good example of that. We think we