Amazon jumps in afterhours on 22 percent revenue growth

amazonSeattle, WA

Shares of Amazon jumped 9 percent in afterhours trading on Tuesday after the world’s largest e-commerce retailer posted strong fourth quarter holiday revenue growth of 22 percent.

Revenue in the fourth quarter 2012 grew to $21.27 billion, compared with $17.43 billion in the fourth quarter 2011.

Still $21.27 billion in revenue missed analysts’ quarterly estimates of $22.26 billion, according to FactSet.

Operating income increased 56% to $405 million in the fourth quarter, compared with $260 million in Q4 2011.

Despite posting 22 percent fourth quarter revenue growth, Amazon’s net income decreased 45% to $97 million in the fourth quarter, compared with $177 million, in the fourth quarter 2011.

Amazon’s net income decreased primarily because their quarterly revenue couldn’t surpass their increased spending on fulfillment centers and digital content which CEO Jeff Bezos has pledged to keep supporting to grow the company for the long-term.

Amazon is trying to grow their higher margin and more profitable businesses with expansions into their cloud based streaming service, Amazon Prime, and electronic books that are sold on Kindle and Kindle Fire tablets.

“We’re now seeing the transition we’ve been expecting,” said Jeff Bezos, CEO of Amazon.com.

“After 5 years, eBooks is a multi-billion dollar category for us and growing fast – up approximately 70% last  year. In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5%. We’re excited and very grateful to our customers for their response to Kindle and our ever expanding ecosystem and selection” Bezos said.

Amazon reported that the fourth quarter 2012 provided its biggest holiday season ever.

According to Amazon, for the second year in a row, Amazon’s tablet-  Kindle Fire HD- was the most popular item for customers and continued its run as the #1  best-selling product on Amazon worldwide.

But actual sales numbers for Kindle Fire HD were not discussed during the conference call.

Amazon reported that their digital media selection has grown to over 23 million movies, TV shows, songs, magazines, books, audio books, and popular apps and games in 2012, an increase from 19 million at year-end 2011.

For 2012, Amazon’s revenue grew 27 percent to $61.09 billion from $48.08 billion, missing analysts’ estimates of $62.1 billion.

First Quarter 2013 Guidance:

  •         Net sales are expected to be between $15.0 billion and $16.6 billion,  or to grow between 14% and 26% compared with first quarter 2012.
  •         Operating income (loss) is expected to be between $(285) million and  $65 million, compared to $192 million in the prior year period
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