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Thu July 23 2009 16:11:44

Amazon.com Announces Q2 2009 Earnings

By: Ina Steiner

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Amazon.com Announces Second Quarter Financial Results; Free Cash Flow Exceeds $1.5 Billion

SEATTLE--(BUSINESS WIRE)--Amazon.com, Inc. (NASDAQ:AMZN) today announced financial results for its second quarter ended June 30, 2009.

Operating cash flow was $1.88 billion for the trailing twelve months, compared with $1.09 billion for the trailing twelve months ended June 30, 2008. Free cash flow increased 89% to $1.54 billion for the trailing twelve months, compared with $0.82 billion for the trailing twelve months ended June 30, 2008.

Common shares outstanding plus shares underlying stock-based awards outstanding totaled 451 million on June 30, 2009, compared with 446 million a year ago.

Net sales increased 14% to $4.65 billion in the second quarter, compared with $4.06 billion in second quarter 2008. Excluding the $227 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 20% compared with second quarter 2008.

Operating income decreased 27% to $159 million in the second quarter, compared with $217 million in second quarter 2008. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $30 million. Second quarter 2009 operating income includes the impact of our settlement with Toysrus.com LLC for $51 million, substantially all of which was expensed during the quarter. Additionally, second quarter 2008 operating income included a $53 million non-cash gain recognized on the sale of our European DVD rental assets.

Net income decreased 10% to $142 million in the second quarter, or $0.32 per diluted share, compared with net income of $158 million, or $0.37 per diluted share, in second quarter 2008.

“We’re pleased that customers saved more than $900 million with our free shipping offers, including Amazon Prime, over the last year,” said Jeff Bezos, founder and CEO of Amazon.com. “We’re staying heads down focused on providing customers low prices, vast selection, and fast delivery.”

Highlights

  • Amazon.com reduced the price of Kindle, the #1 bestseller in its consumer electronics store, to $299.
  • The Kindle Store offers more than 320,000 books, including 104 of 110 New York Times Best Sellers, more than 6,000 blogs and top U.S. and international newspapers and magazines. The Economist, Foreign Affairs, and PC Magazine join top-selling periodicals in the Kindle Store including The New York Times, The Wall Street Journal, The Washington Post, USA Today, The New Yorker, Time, and Newsweek.
  • North America segment sales, representing the Company’s U.S. and Canadian sites, were $2.45 billion, up 13% from second quarter 2008.
  • International segment sales, representing the Company’s U.K., German, Japanese, French and Chinese sites, were $2.20 billion, up 16% from second quarter 2008. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, International sales grew 28%.
  • Worldwide Media sales grew 1% to $2.44 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter sales grew 7%.
  • Worldwide Electronics & Other General Merchandise sales grew 35% to $2.07 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter sales grew 41%.
  • Sellers utilizing Fulfillment by Amazon more than tripled compared to second quarter 2008, and the service has shipped more items year-to-date than in all of 2008.
  • Amazon launched its MP3 music service in France, offering more than 8 million DRM-free songs from all four major labels and hundreds of independent labels that can be played on any MP3 player.
  • The Company launched a beta version of Amazon Wireless (amazonwireless.com), a new website offering cell phones and service plans, hassle-free rebates and FREE Two-Day Shipping on a broad selection of phones initially from AT&T and Verizon Wireless.
  • Amazon Web Services (AWS) launched a public beta of the following new features to make using the Amazon Elastic Compute Cloud (Amazon EC2) even easier for developers: Amazon CloudWatch, a web service for monitoring AWS cloud resources; Auto Scaling for automatically growing and shrinking Amazon EC2 capacity based on demand; and Elastic Load Balancing for distributing incoming traffic across Amazon EC2 compute instances.

Financial Guidance

The following forward-looking statements reflect Amazon.com’s expectations as of July 23, 2009 and exclude Zappos.com, Inc. financial results. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce and the various factors detailed below.

Third Quarter 2009 Guidance

  • Net sales are expected to be between $4.75 billion and $5.25 billion, or to grow between 11% and 23% compared with third quarter 2008.
  • Operating income is expected to be between $120 million and $210 million, or between 22% decline and 36% growth compared with third quarter 2008. This guidance includes approximately $95 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.

A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and will be available for at least three months at www.amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including, in addition to the factors discussed above, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of legal proceedings and claims, fulfillment center optimization, risks of inventory management, seasonality, the degree to which the Company enters into, maintains and develops commercial agreements, acquisitions and strategic transactions, and risks of fulfillment throughput and productivity. Other risks and uncertainties include, among others, risks related to new products, services and technologies, system interruptions, government regulation and taxation, payments and fraud. In addition, the current global economic climate amplifies many of these risks. More information about factors that potentially could affect Amazon.com’s financial results is included in Amazon.com’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and subsequent filings.

About Amazon.com

Amazon.com, Inc. (NASDAQ:AMZN), a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth’s Biggest Selection. Amazon.com, Inc. seeks to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers offer millions of unique new, refurbished and used items in categories such as Books; Movies, Music & Games; Digital Downloads; Computers & Office; Electronics; Home & Garden; Grocery, Health & Beauty; Toys, Kids & Baby; Apparel, Shoes & Jewelry; Sports & Outdoors; and Tools, Auto & Industrial.

Amazon Web Services provides Amazon’s developer customers with access to in-the-cloud infrastructure services based on Amazon’s own back-end technology platform, which developers can use to enable virtually any type of business. Examples of the services offered by Amazon Web Services are Amazon Elastic Compute Cloud (Amazon EC2), Amazon Simple Storage Service (Amazon S3), Amazon Elastic Block Store, Amazon SimpleDB, Amazon Simple Queue Service (Amazon SQS), Amazon Flexible Payments Service (Amazon FPS), Amazon Mechanical Turk and Amazon CloudFront.

Amazon and its affiliates operate websites, including www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca, and www.amazon.cn.

As used herein, “Amazon.com,” “we,” “our” and similar terms include Amazon.com, Inc., and its subsidiaries, unless the context indicates otherwise.




Comments (24) | Permalink

Readers Comments

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Ebay Pays My Minimum Monthly Payment

Thu Jul 23 16:41:20 2009

"Net sales increased 14%"

It's the 14% that Ebay lost. Told ya.

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: x_powerseller

Thu Jul 23 16:57:36 2009

If eBay shareholders have a single healthy brain cell left in their empty heads, they would have figured out the manipulation by the so called Financial analyst (CRIMINALS) who are in bed with the devil, J.D.!

The loser is driving the company into the ground with a decline, quarter after a quarter (THREE QUARTERS IN A ROW) and they are still buying the stock!

Someone should go to jail for deceiving the public!

Amazon has it right .. no doubt about it!

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: joe

Thu Jul 23 18:10:18 2009

Ask me why I like the river so much...

it brings me $$$$$$

without all the crap ebay used to give me...

nothing else to say.

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Herb Rules

Thu Jul 23 18:15:15 2009

Yikes, looking at after hours trading, the street sure isn't liking Amazon's razor thin net income and decline!

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: joe

Thu Jul 23 18:28:43 2009

Yeah and ebay stock is reversing itself also, I guess all the wall street geru's went short on ebay today...probably looking for a quick 10.00 short sale profit...LOL

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Dan

Thu Jul 23 19:16:00 2009

The problem is that the better Amazon continues to do, the more ebay will believe they need to emulate them.

Ebay won't take these kind of reports as, ''see, we told you that the changes to the marketplace aren't working''.

It's the reverse; ebay actually believes that they didn't go far enough with sweeping changes. Ebay sellers better be updating their exit stratagies. Best Match in 2008 was the cancer, but by 2011 or sooner, your small ebay business may be obselete...  

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

This user has validated their user name. by: Doc

Thu Jul 23 20:37:36 2009

I wish Amazon would open Amazon Motors. EBM would be a ghost town except for the GM CPO crap!

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: fruity

Thu Jul 23 21:45:44 2009

I'd trust Amazon more than Ebay when it comes for a car too. Maybe they will do a toyota plan. woot!

Amazon was down this quarter? I wonder does it have to do with that thingy with Toys R US? They lost alot of money there I am pretty sure.

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Daisy

Thu Jul 23 22:23:27 2009

You know, now that you mention it, Amazon Motors could really help out some of these car companies. I'd seriously think about buying a car from Amazon.

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Ebay Pays My Minimum Monthly Payment

Thu Jul 23 22:53:20 2009

Hey Herb, nice to see that you're still hanging around us because, don't forget, you're one of us.

Regardless of the Ebays or Amazons stock price, I think the company with the $90 stock is better than the company with the $20 stock.

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Herb Rules

Fri Jul 24 00:27:09 2009

Hey there. I guess you must be making good money as a seller on Amazon...good for you. For me, my website and eBay works best. Amazon just doesn't work for me at all, and my few buying experiences weren't so good either.

Are you under the impression that you can rank the "quality" of companies by their stock price? For example, Sears is at $68 right now, and Nordstrom is at $26, therefore Sears is a "better" company?

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: ebay's 15 minutes are up

Fri Jul 24 00:43:43 2009

Amazon is kickin the butt of Ebay for us in a head to head test, the same item, Amazon are selling 2-3 for each unit on Ebay. And at a better price, with no free shipping costs.

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Ebay Pays My Minimum Monthly Payment

Fri Jul 24 09:40:54 2009

To Herb Rules: What I'm really saying is hang around successful people, you'll become successful too. Hang around chronic complainers and people who don't get it, and you'll become one of them too.

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Herb Rules

Fri Jul 24 11:26:46 2009

Couldn't agree more my friend...couldn't agree more.

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: king JD

Fri Jul 24 11:49:16 2009

Hang around dunces that have no clue, and you'll become one too.

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Ebay Pays My Bills

Fri Jul 24 12:03:33 2009

AMAZON AUCTIONS

Where can they be found?

I'm not into the fixed price format!

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Ebay Pays My Minimum Monthly Payment

Fri Jul 24 12:04:09 2009


Herb: you had me at Hey!

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Ebay Pays My Bills

Fri Jul 24 12:15:01 2009

Amazon made $141 Million profit in the 2nd Q

Ebay made $327 Million profit in the 2nd Q

CHEW ON THAT FACT! ! !

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Herb Rules

Fri Jul 24 12:44:50 2009

@Ebay Pays My Bills,

Yes, AND that little Amazon profit is on 4.65B of revenue, versus 2.1B for eBay. Plus, Amazon's revenue increased significantly but profit decreased. Hence the nervousness and negative reaction from the street, despite Amazon's Zappos timed splash in an attempt to cloud judgements.

Amazon.com Announces Q2 2009 Earnings   Amazon.com Announces Q2 2009 Earnings

by: Ebay pays Griff's Bills

Fri Jul 24 12:58:26 2009

Best Match killed exposure for lots of sellers; especially those who choose to sell their goods ABOVE cost, (as opposed to sellers still operating a permanent net loss, just living on the ''ebay crack'' of ebay sales/cash flow velocity....a sad life of denial, the ebay ''dream'' of say, 2002 is over, never to return)...staving off bankruptcy.

If you still choose to sell on ebay for any practical reasons at all (i.e. money) that's fine. Now is the time to really look at things in the big picture for ourselves. Business is business, capitalism isn't fair and neither is life. Ebay is a for-profit business and yours should be too!

Ebay is going to do what it wants to do for themselves, sellers should do what they need to do for themselves, as well.

If staying there makes you enough money for your time, then stay, by all means. Time is money, don't just look at this as a hobby, anymore; even if you are a small seller and it IS really just a hobby. Time is money and you have to decide if you want to give ebay your money anymore.

They seem to take for granted that you will no matter what they do.

Sellers, the choice is yours. Life is short!

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