Net income fell 35 percent to $130 million, or $0.28 per share. Amazon reported $13.19 billion in revenue, up 34 percent over last year and beating estimates of $12.9 billion. Operating income was $192 million, down 40.4 percent over last year — implying a profit margin of about 1.5 percent, in line with investor expectations.
The company reports that “Kindle Fire remains the #1 bestselling, most gifted, and most wished for product across the millions of items available on Amazon.com since launch” and says “in the first quarter, 9 out of 10 of the top sellers on Amazon.com were digital products — Kindle, Kindle books, movies, music and apps.” Kindle is “the bestselling e-reader in the world, by far,” CEO Jeff Bezos said. And the Kindle for iPad app is “the #5 free iPad app of all time and the #1 free books app on iPad.” As usual, it provided no actual sales numbers in its release. (Separately, comScore estimated today that the Kindle Fire now makes up 54.4 percent of the Android tablet market, up from 29.4 percent in December 2011.)
In the investor call following the report, CFO Tom Szkutak declined to answer questions about an ad-supported Kindle Fire, the international rollout of the Kindle Fire, or Kindle smartphones. He said “we are seeing very strong growth in Kindle globally.” An international launch for Kindle Fire is “certainly a very interesting opportunity for us and we know that and you’ll have to stay tuned.”
More exclusive e-books; no comment on DOJ
At the top of the release, Bezos touted the “more than 130,000 new, in-copyright books that are exclusive to the Kindle Store,” free to Amazon Prime members through the Kindle Owners’ Lending Library. Seemingly referencing “traditional” libraries, he said, “we have an inexhaustible supply of each title so you never have to wait in a queue for the book you want.” (Bezos also stressed the diversity of the Kindle bestseller list in his recent letter to shareholders: “The Kindle list is chock-full of books from small presses and self-published authors, while the New York Times list is dominated by successful and established authors.”)
In the investor call, Szkutak had nothing new to say in response to a question about the DOJ lawsuit against five publishers and Apple. “We do think that the suit is a big win for Kindle owners and we look forward being allowed to offer more lower prices on Kindle books,” he said.
When asked whether the end of agency pricing on some publishers’ books would lead to lower margins (as Amazon discounts more titles), Szkuktak said only that the company’s “paid unit growth has been certainly helped a lot by e-books” and it’s “growing, as you can imagine, very fast…which has been great for us and great for customers.”
Media sales surge; strong growth in electronics
Worldwide media sales rose 19 percent to $4.71 billion. Amazon also released “consolidated net sales mix” figures showing that media makes up 36 percent of net sales worldwide (down 4 percent since last year) and electronics and other general merchandise make up 60 percent (up 3 percent since last year).
Worldwide electronics and other general merchandise sales grew 43 percent to $7.97 billion. Investors had been waiting to see Amazon’s electronics sales in light of Apple’s very strong earnings report released earlier this week.
In previous calls, investors have wondered whether Amazon will continue to invest heavily in video and the answer continues to be yes. “We are certainly adding more content, specifically more video content,” Szkutak said.