Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu July 26 2012 16:10:18

Amazon Releases Second Quarter 2012 Earnings

By: Ina Steiner

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Amazon released second quarter 2012 earnings, you can view the full release with tables on Amazon's investor website. Amazon's conference call with analysts is at 5:00 pm EST today.


Amazon.com Announces Second Quarter Sales up 29% to $12.83 Billion
Amazon.com, Inc. (NASDAQ:AMZN) today announced financial results for its second quarter ended June 30, 2012.

Operating cash flow was $3.22 billion for the trailing twelve months, compared with $3.21 billion for the trailing twelve months ended June 30, 2011. Free cash flow decreased 40% to $1.10 billion for the trailing twelve months, compared with $1.83 billion for the trailing twelve months ended June 30, 2011.

Common shares outstanding plus shares underlying stock-based awards totaled 468 million on June 30, 2012, consistent with 468 million one year ago.

Net sales increased 29% to $12.83 billion in the second quarter, compared with $9.91 billion in second quarter 2011. Excluding the $272 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 32% compared with second quarter 2011.

Operating income was $107 million in the second quarter, compared with $201 million in second quarter 2011. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $8 million.

Net income decreased 96% to $7 million in the second quarter, or $0.01 per diluted share, compared with net income of $191 million, or $0.41 per diluted share, in second quarter 2011. The second quarter 2012 includes $65 million of estimated net loss related to the acquisition and integration of Kiva Systems, Inc.

"Amazon Prime is now the best bargain in the history of shopping – that is not hyperbole," said Jeff Bezos, founder and CEO of Amazon.com. "We successfully launched Prime seven years ago with free unlimited two-day shipping on one million items. The price of annual membership was $79. Since then, Prime selection has grown to 15 million items. We've also added 18,000 movies and TV episodes available for unlimited streaming. And we've added the Kindle Owners' Lending Library – borrow 170,000 books for free with no due dates – it even includes all seven Harry Potter books. What hasn't changed since we launched Prime? The price. It's still $79. We're very grateful to our Prime members, and thank them whole-heartedly for the business and for the word-of-mouth that has made this program grow."

Highlights

    Kindle Fire remains the #1 bestselling product across the millions of items available on Amazon.com since launch. Over this same period, the top 10 selling items on Amazon.com were digital products – Kindle, Kindle books, and accessories.

    Kindle Owners' Lending Library has grown to over 170,000 books available to borrow for free as frequently as a book a month, including many titles exclusive to Amazon. Additionally, customers can now borrow all seven Harry Potter books in English, French, Italian, German and Spanish.

    During the quarter, 20 of our top 100 bestselling Kindle titles were from Kindle Direct Publishing authors.

    Amazon expanded its catalog of title offerings for Prime Instant Video to more than 18,000 movies and TV episodes, announcing licensing agreements with Paramount Pictures and MGM, for titles including Braveheart, Forrest Gump, Mean Girls, Nacho Libre, Clueless, Moonstruck, Rain Man, Silence of the Lambs, Species, Stargate and many more.

    Amazon.com announced that Prime Instant Video is now available on the Xbox 360 console. Customers can now access Amazon video content through Kindle Fire, PlayStation 3, Mac or PC, or on a TV using either a compatible connected device such as a Blu-ray player or a Roku or directly on compatible Smart TVs.

    Amazon's LOVEFiLM, the leading European film and TV subscription service, announced new multi-year agreements with Twentieth Century Fox Television Distribution and NBCUniversal International Television Distribution, providing LOVEFiLM members in the U.K. exclusive streaming access to movies and TV series from the studios, including Despicable Me, Green Zone, and Robin Hood. The agreements are the latest in a long line of exclusive content deals announced by LOVEFiLM, including agreements with Disney, Sony Pictures, Warner Bros., Entertainment One and STUDIOCANAL.

    North America segment sales, representing the Company's U.S. and Canadian sites, were $7.33 billion, up 36% from second quarter 2011.

    International segment sales, representing the Company's U.K., German, Japanese, French, Chinese, Italian and Spanish sites, were $5.51 billion, up 22% from second quarter 2011. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 28%.

    Worldwide Media sales grew 13% to $4.12 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 15%.

    Worldwide Electronics and Other General Merchandise sales grew 38% to $8.16 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 42%.

    Amazon.com announced that developers can now submit mobile apps for distribution through our upcoming appstore launches this summer on the Company's U.K., German, French, Italian and Spanish sites. In just over one year, the Amazon Appstore on www.amazon.com has grown to tens of thousands of apps and games. For additional information, visit https://developer.amazon.com/welcome.html.

    Amazon.com introduced "GameCircle," an all-new gaming experience for Kindle Fire, and released a series of APIs for developers to add this new experience to their games. GameCircle offers gaming customers a series of features such as achievements, leaderboards, and sync that make gaming even more fun, convenient and social on Kindle Fire. The newly-released GameCircle APIs will help game developers quickly and easily integrate their games with GameCircle, allowing them to grow their business by reaching new customers and keeping them engaged. For additional information, visit http://amazon.com/gamecircle.

    AWS relaunched AWS Support with the expansion of free support for all AWS customers, a reduction in pricing on premium support plans and adding multiple new features to help customers better interact with and improve their use of AWS, including chat functionality and proactive alerts when opportunities exist to save money, improve system performance, or close security gaps. The price reduction marked the 20th time AWS has lowered prices since its launch in 2006. For additional information, visit http://aws.amazon.com/premiumsupport.

    Amazon announced the Amazon Career Choice Program, providing employees with a resource for building the job skills needed for today's most in-demand and well-paying careers. For employees who've been with Amazon as little as three years, the program will pre-pay 95% of the cost of courses such as aircraft mechanics, computer-aided design, machine tool technologies, medical lab technologies, nursing, and many other fields.

Financial Guidance

The following forward-looking statements reflect Amazon.com's expectations as of July 26, 2012. 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 2012 Guidance

    Net sales are expected to be between $12.9 billion and $14.3 billion, or to grow between 19% and 31% compared with third quarter 2011.

    Operating income (loss) is expected to be between $(350) million and $(50) million, down from $79 million in the comparable prior year period.

    This guidance includes approximately $275 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions, investments, or legal settlements 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.

Update: See Friday's Newsflash articles on Amazon's Q2 earnings:

"What Merchants Should Know about Amazon's Q2-2012 Performance" - Link to Newsflash article

"Amazon Grows Q2 Sales and Readies for Busy Fourth Quarter" - Link to Newsflash article




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This user has validated their user name. by: Anonymous Annie

Thu Jul 26 19:10:31 2012

It makes me dizzy trying to understand it all. (Although I must admit that the Amazon report sounds more straightforward and less BS-y than eBay's.)

In any case... when both reports are boiled down, is there a clear "winner" in the Amazon vs. eBay battle?

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This user has validated their user name. by: Doc

Thu Jul 26 21:10:49 2012

So far this month I have made 3 purchases on Amazon. As usual the experience has been great.  

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by: Digmen1 This user has validated their user name.
Web Site

Fri Jul 27 03:32:55 2012

Amazon's report is a lot more detailed and much clearer than ebays.

But it does seem at they are selling mostly Kindles and, digital media. 10 of their top ten selling products were digital.

So why do they need all of those fullfilment centres ?

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This user has validated their user name. by: LDS Brother

Fri Jul 27 07:38:33 2012

Annie said:
" In any case... when both reports are boiled down, is there a clear "winner" in the Amazon vs. eBay battle? "

I would say yes Annie, that being Amazon......... Just look at their stock price since 2008

I think Donahoe is a dual CEO, even though he took over eBay in 2008 he helped Amazon grow by leaps and bounds

You had it all eBay ! All Donahoe needed to do was some tweaks here and their to bring buyers, and crack down on truly lousy sellers. He needed not punish us all to deal with the bad sellers

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by: JustTheFacts This user has validated their user name.

Fri Jul 27 10:02:46 2012

I think both ebay and amazon need some REAL AUDITING, and then we would all see the REAL TRUTH!

When ebay and Amazon come out with their quarterly statements I always think about World COM and Enron.

I recommend people MAKE (not FIND but MAKE) the time to look OUTSIDE of ebay and Amazon and pay CLOSE attention to what is actually happening in the world and the world economies and then plan your business according to THAT rather than ebays and Amazons newest report and or scheme.

I know MOST of you won't but something tells me that come the first quarter of next year at the latest, you will ALL wish that you HAD!

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by: amazongenius This user has validated their user name.
Web Site

Fri Jul 27 12:20:54 2012

Justthefacts- We agree with you but if you're using Amazon and eBay to make money, it's wise to pay attention to what both those parties are doing. Keep your friends close and your enemies closer lol. Anyone have any say on what's going on with PayPal?

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by: Digmen1 This user has validated their user name.
Web Site

Fri Jul 27 15:08:37 2012

There is nothing wrong with Paypal.
They keep buying other companies, so they are not short of cash.

Eg Zong and Cardio.

The only thing wrong with Paypal is that they are owned by ebay, and act in ebay's interest.

Perminate Link for Amazon Releases Second Quarter 2012 Earnings   Amazon Releases Second Quarter 2012 Earnings

This user has validated their user name. by: Nolle

Fri Jul 27 20:52:17 2012

There is some concern with Amazon at this point.  They didn't make any money on all that revenue, they are burning through their cash, and are sending signals they may actually go into the red by year's end.

Not good for a company trading at 200x earnings and way above the rest of the industry.  

It's beginning to look very expensive, stock-wise.

Here's an interesting, and quite negative outlook from seeking alpha:

http://seekingalpha.com/article/757641-amazon-com-the-fa
ntasy-keeps-growing



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