Amazon.com Q4 Earnings Up 9%, Sales Up 18%
Amazon.com’s net income increased nearly 9%, to $225 million, in the fourth quarter (ended Dec. 31), or $0.52 per diluted share, compared with net income of $207 million, or $0.48 per diluted share, in fourth quarter 2007, Amazon reported.
Net sales increased 18% to $6.70 billion in the fourth quarter, compared with $5.67 billion in fourth quarter 2007. Excluding a $320 million unfavorable impact from changes in foreign exchange rates, net sales would have grown 24%, Amazon said.
Operating cash flow was $1.70 billion in 2008, compared with $1.41 billion in 2007. Free cash flow increased 16% to $1.36 billion in 2008, compared with $1.18 billion in 2007.
Operating income was $272 million in the fourth quarter, compared with $271 million in fourth quarter 2007. Excluding the $26 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, operating income would have grown 10% compared with fourth quarter 2007.
(In December, Amazon said its 2008 holiday sales had been the “best ever.”)
Financial Guidance
In the first quarter of 2009, net sales are expected to be between $4.525 billion and $4.925 billion—that is, up between 9% and 19% compared with the first quarter of 2008.
Operating income is expected to be between $125 million and $210 million, or between a 37% decline and a 6% increase compared with the first quarter of 2008.
This guidance includes approximately $75 million for stock-based compensation and amortization of intangible assets, and it assumes that no additional business acquisitions or investments are concluded and that there are no further revisions to stock-based compensation estimates.
Full Year 2008
Net income increased 36% to $645 million in 2008, or $1.49 per diluted share, compared with net income of $476 million, or $1.12 per diluted share, in 2007.
Net sales increased 29% to $19.17 billion, or 28%, excluding the $127 million favorable impact from year-over-year changes in foreign exchange rates throughout the year, compared with $14.84 billion in 2007.
Operating income increased 28% to $842 million, or 27% excluding the $10 million favorable impact from year-over-year changes in foreign exchange rates throughout the year, compared with $655 million in 2007. Included in 2008 operating income is a $53 million non-cash gain recognized on the sale of the company’s European DVD rental assets.
Highlights
Amazon lists the following as Q4 highlights:
North America segment sales, representing the Company’s US and Canadian sites, were $3.63 billion, up 18% from the fourth quarter of 2007.
International segment sales, representing the Company’s UK, German, Japanese, French and Chinese sites, were $3.07 billion, up 19% from fourth quarter 2007. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, international sales grew 31%.
Worldwide media sales grew 9% to $3.64 billion, compared with $3.33 billion in the fourth quarter of 2007.
Worldwide electronics & other general merchandise sales grew 31% to $2.89 billion, compared with $2.21 billion in the fourth quarter of 2007, and increased to 43% of worldwide net sales compared with 39%.
Amazon.com introduced Frustration-Free Packaging, a multi-year initiative designed to make it easier for consumers to liberate items from their packaging by eliminating hard plastic clamshell cases, plastic bindings and plastic-coated wire ties. The program launched with products from leading manufacturers including Fisher-Price, Mattel, Microsoft and Transcend.
Amazon.com shipped over 3 million units worldwide in fourth quarter 2008 on behalf of sellers who utilized “Fulfillment by Amazon.”
Amazon.co.uk launched the Amazon MP3 music service, offering more than 4 million DRM-free songs from all four major and hundreds of independent labels that can be played on any MP3 player.
Amazon Web Services (AWS) launched Amazon CloudFront, a self-service, pay-as-you-go web service for content delivery enabling global content distribution and seamless integration with Amazon S3.
AWS launched the ability to run Microsoft Windows Server on Amazon Elastic Compute Cloud (Amazon EC2) and enabled customers to run their Amazon EC2 instances in two Availability Zones within a new European Region with full-service features like Elastic IP addresses and Amazon Elastic Block Store.
AWS introduced tiered pricing for Amazon S3, enabling customers’ costs to decrease as their storage volume grows.
The Kindle Store contains the largest collection of e-books available anywhere in the world. Selection increased by 45,000 titles in the fourth quarter, bringing the total to 230,000 titles. One hundred three out of 112 current New York Times bestsellers are available and, along with most new releases, are priced at $9.99 or less. The Kindle Store recently added The Arizona Republic, The Baltimore Sun, The Orange County Register and USA Today and now offers newspapers from 8 of the top 10 metro areas in the United States.