Amazon profit doubles on sales of electronics

Amazon.com, the world’s largest Internet retailer, reported that its second-quarter profit more than doubled as a jump in sales of electronic items combined with a rise in overseas revenues as the cheap dollar made products cheaper for customers outside the US.

The retailer, which also benefited from a $53 million gain from the sale of some European DVD rental assets, defied the weakening US economy to report a $158 million profit for the period, although the sales growth was driven by sales abroad.

Furthermore, Amazon said that sales could reach $20.1 billion for the year, slightly ahead of the maximum prediction of $20 billion earlier in the year. The retailer expects full-year profits of $745 million to $920 million.

The second-quarter profit, which equated to $0.37-a-share, beat analysts estimates by $0.11, and compared to $0.19-a-share profit income a year earlier. The group’s overall revenues increased by 41 per cent to $4.06 billion. Meanwhile, international sales rose by 47 per cent to $1.89 billion. Without the impact of the weak dollar, overseas revenue grew by 34 per cent.

So-called media sales, which comprise items such as books, CDs and DVDs, rose by 31 per cent to $2.41 billion across the group, while electronics and general merchandise recorded a 58 per cent jump to $1.53 billion.

Scott Devitt, an analyst with Stifel Nicolaus, described the results as being “good, very solid”.

Amazon may also be benefiting from the soaring cost of petrol, according to Dan Geiman, an analyst at McAdams Wright Ragen.

“They’re still doing extremely well [despite the economy]. If gas prices are high, customers are less likely to hop in their cars and head down to the Barnes and Noble or a department store.”

Jeff Bezos, founder and chief executive of Amazon, also seemed pleased with the results.

“Customers continue to take advantage of our low prices, free shipping and Amazon Prime. Amazon Prime membership costs less than a tank of gas – more and more customers are joining the programme and enjoying its benefits.” Prime Membership offers free two-day shipping of items for an annual fee.

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3 Responses

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  2. One of the most important things about Amazon that nobody seems to be touching on is that they are in the midst of transitioning from a retailer to a tech company. Through its Amazon web Services, Amazon is poised to become a key player in the cloud computing world, which is not too far from mainstream adaptation. If you are monitoring Amazon’s stock you should definitely read this article.

    http://www.shellypalmermedia.com/2008/07/25/amazon-transitioning-into-a-technology-and-cloud-services-company/

    Mike McGregor
    Advanced Media Ventures Group

  3. For those of you with Amazon Prime memberships, here is a useful website to search for Prime items:
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