Amazon rides shoe-fetishist to 68% profit leap
As Kindle goes - gasp! - brick and mortar
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Amazon says its profits climbed 68 per cent in its first quarter. And it says the Kindle "remains our #1 bestselling product." But, yes, it's unclear how much of that profit rise came from the seminal ereader, which now sits in the shadow of the Apple iPad.
Amazon has never given specific Kindle sales figures. And this didn't change with today's announcement of the company's first-quarter earnings.
During the quarter that ended on March 31, the etailer pulled in profits of $299 million, up 68 per cent from the same quarter last year. Revenue grew to $7.13 billion, a 46 per cent leap from 2009.
But these numbers aren't quite as bright as they seem. On January 1, Amazon introduced an accounting change that tags part of its Kindle sales as hardware revenue, and that means it shows up on the balance sheet sooner than it did in the past. What's more, this is the first quarter where the company has benefited from its purchase of shoe-fetishist etailer Zappos, which it acquired last summer for $850 million.
In any event, the company's Q1 number beat the guesses of the Wall Street guessmen. But its predicated Q2 numbers fell below the guesses of the guessmen, and its stock took a tumble, falling 6 per cent in after-hours trading.
This, however, is not where Bezos is looking. "We remain heads-down focused on customers," read a canned statement from CEO and founder Jeff Bezos. "Amazon Prime has just celebrated its fifth anniversary, adoption of Amazon Web Services continues to accelerate, Kindle remains our #1 bestselling product, and earlier this week, Kindle selection reached 500,000 titles."
Which sounds a lot like what he says every quarter. The company not only declines to give Kindle sales figures, it also stays mum on the size of Amazon Web Services, which provides on-demand access to computing resources and applications.
But the company does like to tell you how many titles are in the Kindle store. And in the long run, it's the ebooks Amazon is most interested in selling - not the physical ereaders. Amazon recently introduced Kindle software for the iPad, and such software is already available for the iPhone, the PC, and the BlackBerry.
That said, the physical Kindle is still a means of selling those ebooks, and today, Amazon confirmed that for the first time, the device will be available in a good old-fashioned brick and mortar outlets. The Kindle is expected to hit Target stores in the US later this month. ®
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COMMENTS
@ sleepy
@ sleepy - you would be right if the price of a stock was purely defined by revenue growth - but this isn't the case - profit; future potential growth; risk; dividend payout policy etc all play a part in a stock price
e.g. (ps the following is not investment advice or research but just guesses)
The market may see more risk in a luxury hardware manufacturer than in a global online retailer (especially if the economy worsens!!!) and price accordingly - just cos they are "techs" does not mean they share the same risks
Both shares are performing well - but investors may take the view that until Apple has a new super product about to come out - its growthover the mid term may be limited...... On the other hand they may see that Amazon as a place where a lot of shoppers go to save money - and will continue to go as there are few to dislodge it from its position!!!
Dividend policy is a biggie - major financial institutions (who hold the bulk of investments) are looking for steady dividend income over the long term (so they can keep paying out on insurances, pensions etc). So they may be prepared to pay more for Amazon if they have good dividend record and are likley to keep paying out than if Apple is not...
Apple has to continually make huge R&D investments with no guarantee of hitting it bug - while Amazon just has to make sure its competitively priced (which it can do because of its market position)
I don;t know if any of the above hold true for either of these companies - but what I'm trying to say is that revenue growth isn't the sole determinant of a share price
in my OPINION (not financial advice) I think both are overpriced anyway - especially Amazon!!!
True that
The Kindle is indeed grossly overvalued.
Oh, you were talking about the stock market ? Sorry, I tend to not worry about things I can do nothing about.
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