Amazon posted first quarter earnings on Tuesday that beat Wall St. estimates with their quarterly revenue but fell short with net profits.
Amazon’s revenue increased 22 percent to $16.07 billion in the first quarter, compared with $13.18 billion in first quarter of 2012.
Amazon reported net profit of $82 million in the first quarter, down 37 percent compared with their net profit of $130 million, in the first quarter of 2012.
Amazon’s profit decline is due in large part to their spending for new distribution centers, acquisitions, and digital media collections.
The company is committed to expanding its media selection for Prime Instant Video. Amazon has obtained new licensing agreements with A+E Networks, CBS Corporation, FX, PBS Distribution and Scripps Networks Interactive, allowing Prime members to have exclusive access to a popular television series such as Downton Abbey.
The world’s largest online retailer also continues to invest heavily in building more fulfillment centers, allowing their products to be distributed faster while saving money in shipping costs.
From their latest earning report, it appears that Amazon’s investment in fulfillment centers is paying off.
During the first quarter of 2013, net shipping costs were 4.7 percent of sales, down from 5.1 percent from the first quarter of 2012.
Earlier in the week, reports surfaced that Amazon is to release a television set-top box that would stream video over the Internet into customers’ homes, moving the company into closer competition with Apple T.V. while allowing developers to have more space to develop Amazon’s media footprint.
Amazon’s first quarter media revenue showed some momentum and increased to $5.06 billion, up 7% or 10% excluding foreign exchange.
Gross margin was 26.6 percent in the first quarter, compared with 24 percent in the first quarter of 2012.
Amazon’s second quarter forecast varies from an operating loss of $340 million to a profit of $10 million, down from analysts’ projections for a profit of $165.1 million.
For Q2, 2013 Amazon expects net sales of between $14.5 billion and $16.2 billion, a growth of between 13% and 26%.
Analysts are projecting sales to increase 24 percent $15.9 billion.