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Amazon’s Q4 Earnings Disappoint

Growing operating expenses sink profits.

Amazon’s e-readers were hot items during the nine-week holiday season, but the company had a less-than-stellar final quarter of 2011, officials announced on Tuesday.

While the company’s net sales increased 35 percent to $17.4 billion during the fourth quarter, experts had expected a number more like $18.3 billion. Amazon’s profits also disappointed. Net income sank 58 percent to $177 million during 2011’s fourth quarter, down from $416 million during the same time in 2010.

One thing that did grow was operating expenses, as the retail giant invested in new fulfillment centers in the U.S. These expenses increased by 38 percent during the quarter to $17.2 billion.

Fire a bright spot

Amazon’s Kindle Fire and other e-readers proved to be shining stars with sales of the devices increasing by 177 percent during 2011’s final quarter.

“We are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices this holiday season, making Kindle our bestselling product across the U.S. and Europe,” says Jeff Bezos, founder and CEO of Amazon.com.

Amazon’s third-party sellers “had a tremendous holiday season with 65-percent unit growth and represent 36 percent of total units sold,” he adds.

Overall, revenue for 2011 increased 41 percent to $48.08 billion, up from $34.2 billion in 2010, while net income decreased 45 percent to $631 million, compared with $1.15 billion in 2010.

For the first quarter of 2012, Amazon expects to see net sales between $12 billion and $13.4 billion.

About the author

Olga Munoz
Olga Munoz is editor of TheOnlineSeller.com. In addition to writing news and feature articles about e-commerce, selling trends, online marketing and other topics of interest to online sellers, Olga manages the site's social media efforts. A journalism graduate of Chico State, Olga says her favorite part of being a journalist is learning interesting facts that help put stories into perspective, attending industry events and meeting interesting people "that leave you smiling, even in tough situations." Opinions expressed here may not be shared by The Online Seller and/or its principals.



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