Amazon (AMZN) today announced financial results for its fourth quarter ended December 31, 2011.
Operating cash flow increased 12% to $3.90 billion for the trailing twelve months, compared with $3.50 billion for the trailing twelve months ended December 31, 2010. Free cash flow decreased 17% to $2.09 billion for the trailing twelve months, compared with $2.52 billion for the trailing twelve months ended December 31, 2010.
Net sales increased 35% to $17.43 billion in the fourth quarter, compared with $12.95 billion in fourth quarter 2010. Excluding the $101 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 34% compared with fourth quarter 2010.
Operating income was $260 million in the fourth quarter, compared with $474 million in fourth quarter 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $5 million.
Net income decreased 58% to $177 million in the fourth quarter, or $0.38 per diluted share, compared with net income of $416 million, or $0.91 per diluted share, in fourth quarter 2010.
“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 both the U.S. and Europe,” said Jeff Bezos, founder and CEO of Amazon.com, in the press release. “Our millions of third-party sellers had a tremendous holiday season with 65% unit growth and now represent 36% of total units sold.”
Highlights
• During the nine-week holiday period ending December 31, 2011, Kindle unit sales, including both the Kindle Fire and e-reader devices, increased 177% over the same period last year.
MacDailyNews Take: All Kindles, including low-end US$79 B&W Kindle eReaders, lumped together. Note the lack of a hard unit sales number; selling 100 units of anything then selling 277 units, results in a 177% increase, too.
During the same period last year, Amazon’s Kindle devices started at US$189, significantly higher than the $79 price for the low-end Kindle this holiday season. In other words, “nearly tripling” was the best Amazon could do after hacking the entry level price by so much?
• Kindle Fire is the #1 bestselling, most gifted, and most wished for product across the millions of items available on Amazon.com since its introduction 17 weeks ago.
MacDailyNews Take: If Kindle Fire is oh-so-popular, why doesn’t Amazon give the real numbers?
• Amazon launched Kindle Stores at Amazon.it and Amazon.es. Kindle moved to the top of the bestseller list on launch day in both countries and held the top spot this holiday season. The new Kindle was also the bestselling product on Amazon.co.uk, Amazon.de and Amazon.fr.
MacDailyNews Take: “Kindle.” Which Kindle? All Kindles? Why the obfuscation, Amazon?
First Quarter 2012 Guidance
• Net sales are expected to be between $12.0 billion and $13.4 billion, or to grow between 22% and 36% compared with first quarter 2011.
• Operating income (loss) is expected to be between $(200) million and $100 million, or between 162% decline and 69% decline compared with first quarter 2011.
• This guidance includes approximately $200 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions or investments are concluded and that there are no further revisions to stock-based compensation estimates.
Source: Amazon.com, Inc.
MacDailyNews Take: As always, Amazon gives no Kindle unit sales numbers. The charade continues.
MacDailyNews Note: Currently, Amazon shares have dropped 9.09% (-$17.68) to $176.76 in after-hours trading.
[UPDATE: 5:14pm EDT: Corrected 177% increase math as per ChrissyOne.]
[Thanks to MacDailyNews Reader “ChrissyOne” for the heads up.]
I hedge my bets, and own both Apple and Amazon stock. I enjoy seeing both succeed, and both are performing well.
Me too. 😉
Your definition of “performing well” needs work:
Currently, Amazon shares have dropped 9.09% (-$17.68) to $176.76 in after-hours trading.
Are you guys completely oblivious to what is going on around the world? Euro crisis and Iran situation? Amazing… you can guess when the next iPhone is coming out but not what might be happening to the financial markets soon.
AMZN share dropped because their earnings fell and their sales missed targets, not because the Euro and European socialism were stupid ideas that were always doomed to fail.
Socialism: «You keep using that word. I do not think it means what you think it means.» — Inigo Montoya
LOL! It’s not socialism which is killing the Euro economy. It’s the good old conservative “banks first, people second mentality”. They’re cutting their own legs off with austerity measures, just to make sure the banks get paid.
But then, you’d know this if your interest in the situation extended beyond jerking a knee.
——RM
Government borrows billions to fund corrupt socialism and you blame it on the banks?
Only question is, are you really that stupid, or do you really think we are?
Sorry Jackson, did you not notice that Apple posted record high intraday and closing numbers today? Too bad about that Euro crisis, eh?
The stock has been doing nicely, but it has been defying gravity, with no fundamental support.
I mean Amazon’s full-year profit was around $634M, or about half the year before, and which is less than 1/20th of what Apple just made in a single quarter. That stock is dangerously close to pulling a Netflix.
Amazon is not even in the same league as Apple. One is not a hedge for the other.
Didn’t Amazon a while back list each iPod separately by color on their sale charts? Yet their own kindles are all lumped together to make them seem more popular!
No kidding! Why doesn’t anyone at the shareholder meeting stand up and ask for actual numbers? It’s not some super-secret new product they’re covering up, they are entitled to such basic information in order to make (semi-)informed decisions about their Amazon holdings.
How is a 58% decrease in Net Income winning? Jeff Bezos, the next Steve Jobs? Puhleaze! He’s not even the next Steve Ballmer.
Ouch!
I like Ballmer, please don’t pick on him, please ……
I mean I like our position …. I mean the position he is in …..DRIVING tech forward …. Yea, I like our strategy, I mean his position ….
I mean I’m not sure but I like the other Steve, so please don’t pick on him, please …..
@Billyjackblack
Good one!
May be they need to came out with some other cartoon heros like RIM.
Hilarious!
Don’t worry they can make it in volume!
well, since there were no Fires last year, if the entire 177% increase in Kindle sales are Fire sales, and all Kindles sold at 1 million per week for 9 weeks, then Amazon sold about 5.75 million Fires this last quarter, accounting for about $1.15 bilion of the revenue increase. if the entire $239 million decrease in net profit was the fault of the Fire, then Amazon is losing $42 net on each Fire made.
i know that’s all way too simple and overstated. but the truth is likely something in that direction.
The entire 177% increase was certainly not attributable to Kindle Fires.
You have no proof that “all Kindles sold at 1 million per week for 9 weeks.”
Most likely the 177% increase is weighted heavily toward $79 stocking stuffer Kindle eReaders and that makes 177% look weak.
Your “if” is too big a leap.
did any of you guys read my second paragraph? comprehende?
let me put it in little bites for you: the Fire, having sold some millions, added a significant amount to quarterly gross revenues, but also caused a significant part of the much reduced profits too. Amazon is taking a loss on every Fire sold, the only question is just how much that is.
Yeah but there’s no way the entire increase was due to the Fire. Amazon slashed prices on Kindles across the board and ramped up their marketing. There would’ve been an increase even among regular ereaders.
I don’t see how anyone can make any judgements based off the slivers of info that Amazon provides.
Not correct. Amazon announced Kindle sales during the quarter, and gave hints on proportions. From that data it could be said that Kindle Fire sales are bigger than 3 million and less than 4 million.
Something tells me they’re making a huge loss on each Fire sold?
The $79 Kindle is a great product at a great price for what it is. My wife’s company gave one to all their employees. I can see Kindle sales going up for those, the Kindle Fire, not so much.
Agreed; bought one for my wife. They are nifty little gizmos that are well worth the money. I even like the way they do the ads.
I thought the one without the ads was only about $20 more? If so, why would you buy the one with ads?
Because the ads are totally unobtrusive.
I got the basic one as a gift, I agree It is superb for what it is: an ebook reader, nothing more. I read it on the bus to and from work. Wouldn’t dream of pulling out an iPad on the bus I take.
Would never buy anything using it though–typing with the on-screen keyboard using the D-pad is painful, so I’d buy or load from my Macbook instead.
Why all the dislike? Amazon is well-run company and the Kindle is a cheap and effective e-reader to support their book-selling market; Kindle isn’t in the same category as the iPad and isn’t likely to take away from iPad sales or popularity. Indeed, people I know – people who read for pleasure – have both.
I agree. Some people just want to read books in a modern way. The Kindle is great for that. I think the pushback on Amazon is primarily from all the Press positioning the Kindle Fire as an iPad competitor. This is a preposterorous assertion, and it’s made iPad fans bristle. It’s also due to Amazon’s “spinning” sales numbers without details, and marketing-speak such as “most wished for” tablet. I suspect that given the choice 98% of those offered would choose the iPad over the Fire (and I’m being conservative).
Thats some serious double-talk, googlyspeak, yingyang, yabadabadoo BS from Amazon…
you forgot jibber-jabber, my personal have.
have?….fave.
+1
Their profit forecast of somewhere between a $200 million LOSS and $100 million profit must be very dependent on how many Kindle Fires are returned.
Anyone else think it’s rather strange to have sales of between $12 billion and $13.4 billion, but between a $200 million LOSS or $100 million profit? That is an awfully razor-thin profit margin.
Yeah, Bezos took Steve’s RDF, and hypnotized the market, since they’re guiding to a loss and yet, the company is still worth $80,000,000,000.
To be exact, 177 million in profit on 17.43 billion in revenue. That’s a hair over one percent.
oh yeah – triple — 3 x 100,000 units is great for AmaPong and its KiddiePad — but 1/2 returned their purchase only 13 days later.
Well yea, they advertise the heck out of it.
When I do a search for women’s jewelry, I get a list of rings, necklaces, earrings . . . and a Kindle.
When I do a search for car parts, I get an accurate list of the parts I’m looking for . . . and a Kindle.
When I just go to the home page I use to get a full list of suggested items I was interested in. Now it’s just a big ad for . . . a Kindle.
I wonder how much revenue they are loosing because all their ad space is now taken up by . . . a Kindle.
“net income plummets 58%”
I think I just answered my own question.
“Amazon launched Kindle Stores at Amazon.it and Amazon.es. Kindle moved to the top of the bestseller list on launch day in both countries and held the top spot this holiday season”
Wow, they needed to add Amazon.gr(eece) for the troika! Then they could be the top of the bestseller list in the three imploding Euro economies.
So, Amazon’s full year profit was $634M, about half the year before? Their full-year profit was just a tiny fraction of Apple’s last quarter profit, less than 1/20th, and yet their company is worth almost 1/4 of Apple? Are investors nuts?
At the close today Amazon was trading at over 100 x earnings and their margins are razor thin.. Even if they post good earnings in the future they are going to have to grow into their PE ratio from this point on. A couple more misses and it’s stock will get slaughtered.
I hope that Amazon keeps selling lots of Kindles. It appears to be the fastest way to put them out of business.
the big question is whether the short term losses the Fire is causing Amazon – including the next (current) quarter – can be made up via long term increased Fire-driven Amazon store purchases. maybe – or maybe not. Bezos is pretending the Fire is not a big gamble. but the stock market plainly sees that it is.
i like their strategy. i like it a lot.
Amazon is a dishonest company, and regularly misrepresents their products. They have good customer service but are abusive to their employees and lie to shareholders.
I had shopped often at Amazon as my primary online site. When you buy a $10 item and then get hit with a $6.95 shipping charge, then you are paying more than many other sites with free or lower shipping costs.I, like many others have taken our shopping elsewhere without any thought to Kindle.
Gaelic1, I don’t know what your problem is with the shipping charge. Unless it is coming from an outside vendor, you can easily know what the charge is in advance. It can be a little trickier figuring it out for an outside vendor when you also get some Amazon products, but doable. Separate Amazon from their 3rd party sellers. Hard to do, I know. But I do it.
Amazon if a very important part of online shopping life for many, many people. I hope they stay healthy. They have gone well out of their way to keep costs (like state sales tax) away from their customers and generally have decent customer service.
Read reviews at Amazon and elsewhere to confirm product quality, Engineer. Again, you may be looking at 3rd party vendors selling through Amazon. I make a definite distinction between the two.