Amazon Q4 2011: Net Income Falls 58 Percent, Kindle Sales Soar

Amazon Inc. has announced its earnings from the last quarter of 2011.

According to a press release, net sales increased to $17.43 billion, a 35 percent increase over the fourth quarter of 2010.

Net income for Q4 2011 decreased 58 percent to $177 million, or $0.38 per diluted share. Net income for the fourth quarter of the previous year totalled $416 million, or $0.91 per diluted share.

Kindle sales soared during Q4 2011, especially the Kindle Fire, which Amazon said was the top-selling product on Amazon.com for the 17 weeks preceding December 31, 2011. According to Amazon, sales of the entire Kindle line -- including tablets and eReader devices -- increased by 177 percent over Q3 2010 during the nine-weeks holiday sales period ending on December 31.

Results for the entire year are as follows, per Amazon's release:

Net sales increased 41% to $48.08 billion, compared with $34.20 billion in 2010.[...]

Operating income decreased 39% to $862 million, compared with $1.41 billion in 2010.[...]

Net income decreased 45% to $631 million in 2011, or $1.37 per diluted share, compared with net income of $1.15 billion, or $2.53 per diluted share, in 2010.

The company's earnings just missed quarterly projections.

"Analysts polled by Thomson Reuters anticipate[d] earnings of 17 cents a share on revenue of about $18.3 billion," the Wall Street Journal wrote ahead of Amazon's Q4 2011 earnings report on January 31.

Immediately following the earnings report, Amazon stock took a tumble in after-hours trading, falling 8.6 percent ($16.71) to $177.73, according to the AP.

Comments

[frank1946]

12:55 AM on 02/02/2012

I boycott Amazon, they refuse to pay local Sales Tax..........................love the Sales but
hate the social responsibility !

Barnes and Noble gets my $$$..................just that simple !

[katwright]

03:11 PM on 02/01/2012

Maybe but just maybe if they wouldnt treat 3rd party sellers as criminals,they could make more profit.

[BilloBrillo]

12:23 PM on 02/01/2012

Amazon's stock price is a bubble. People are clearly buying it based on emotion rather than fundamentals. It's been a "future will be bright" company for 15 years. At some point you have to start justifying a price-to-earnings ratio almost ten times that of Apple and Microsoft.

[saythisword]

11:43 AM on 02/01/2012

There are also people boycotting Amazon based on the conditions at their warehouses, which must have had some effect.

[koppenberg]

06:49 PM on 02/01/2012

The article says they had a 35% Q4 sales growth year on year. That hardly sounds like an effective boycott (unless they were projecting far higher sales growth).

If their net income dropped despite such huge sales growth, sounds like they succombed to price pressures more than a boycott.

I know for a fact that they marked down some high dollar items in a HUGE way in Q4--I know because I was able to take advantage of it for a gift I bought :-).

Plus it was widely expected that the Kindle Fire would be a loss leader.

[savory1]

11:41 AM on 02/01/2012

I love Kindle and purchased the touch sans advertisements for my teen an with ads for my Mom. Want the Fire but....I need to be able to do a bit more with it. I am an Amazon freak! I am sold on one click!

[BilloBrillo]

12:31 PM on 02/01/2012

Amazon or Bieber? It's just too hard to decide!

[ILoveGreatDanes]

10:13 AM on 02/01/2012

Amazon will come out smelling like a rose. Selling the Kindle Fire at a loss was actually a very shrewd business move for them.

[BilloBrillo]

12:30 PM on 02/01/2012

They will come out smelling like a massively overvalued stock, at least.

[disgustedcitizen]

08:36 AM on 02/01/2012

We bought two Kindle Fires for Christmas, one for me, (by the way, I love it! Great reader and I love that I can get on the internet with it.) and one for my son plus at least $300 in gift cards. I think we did our part.

[kimsmith9]

07:20 AM on 02/01/2012

I was very encouraged to find this site. I wanted to thank you for this special read. I definitely savored every little bit of it.

valentine's day gifts

[clearthinker2008]

06:38 AM on 02/01/2012

One of my favorite sayings in business is "loss". For example last year we made 1 million in profits, and this year we made 700,000 so we "loss" 300,000. How about your profits were 700,000 bucks? Continued growth is a myth, even for Apple. Nothing last forever.

[jflorish]

08:32 AM on 02/01/2012

Of course nothing lasts forever. Good feedback captain obvious. :)

[mutatio]

12:15 AM on 02/01/2012

Funny, no mention of kindle returns in the mix, given it's rough run in professional and consumer reviews. Knowing how many have been returned might say more about the profit picture than just the sales.

[LeftHandUTurn]

11:28 PM on 01/31/2012

Nothing has recovered since the fall of 08, I have a relation who has a book selling business on Amazon and the pace has simply never recovered. It's kind of misleading to be talking sales net and profits while still in a recession.

[eejones]

11:15 PM on 01/31/2012

This seems like a buying opportunity to me - their stock I mean.

[eric14]

07:50 AM on 02/01/2012

Not yet, gladiator, not yet.

[BilloBrillo]

12:24 PM on 02/01/2012

At the current price? Insane. Amazon stock is easily three times what it's worth, if not more. It was a sound investment at forty or fifth dollars. At near $200 per share? Ridiculous.

[DRaymond]

09:48 PM on 01/31/2012

It was well known that Amazon were selling Kindles at less than cost.  So strong Kindle sales hurt them.  The expectation was that many months of content sales would make a difference.   We shall see.

[Highball]

10:57 PM on 01/31/2012

Exactly. The more they sell, the less their net income -- unless that planned-on back-end profit comes through. It's a risky move.

[JohnUSA]

08:34 PM on 01/31/2012

Similar marketcap to Facebooks estimates. Go figure.

[Craig Koebelin]

08:31 PM on 01/31/2012

The Kindle Fire is a loss leader.

Me, my sweetie, my nephew, several friends and their parents all got $199 Kindle Fires for Christmas.

Now we're buying books from Amazon. Lots.

Amazon earnings should look good in 2012.

[planetjeffy]

09:11 PM on 01/31/2012

exactly...plus huge marketing costs for the rollout

time to buy Amazon stock

[jflorish]

09:42 PM on 01/31/2012

Not for me, I wouldn't touch that stock right now.

[Craig Koebelin]

12:24 AM on 02/01/2012

Downloaded 8 volumes of Decline and Fall of the Roman Empire for free, hope that doesn't hurt the share price.

[eric14]

07:55 AM on 02/01/2012

Free reading from archive is going to hurt. I think you have hit the nail on the head.

[John MC]

03:01 PM on 02/01/2012

You should check out the Free To Play economic system for online games.

There is always and even sometimes large portion that plays for free, but then there is a few people who go overboard and their purchases more than make up for the people who play for free. That's the model here.