Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu Jan 30 2014 16:12:21

Amazon Releases Fourth Quarter 2013 Earnings

By: Ina Steiner

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Amazon's conference call with analysts is at 5:00 pm EST today, here is the company's press release announcing fourth quarter 2013 earnings, you can view the full release with tables on Amazon's investor relations website.

Amazon.com Announces Fourth Quarter Sales up 20 Percent to $25.59 Billion
Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its fourth quarter ended December 31, 2013.

Operating cash flow increased 31% to $5.47 billion for the trailing twelve months, compared with $4.18 billion for the trailing twelve months ended December 31, 2012. Free cash flow increased to $2.03 billion for the trailing twelve months, compared with $395 million for the trailing twelve months ended December 31, 2012. Free cash flow for the trailing twelve months ended December 31, 2012 includes fourth quarter cash outflows for purchases of corporate office space and property in Seattle, Washington, of $1.4 billion.

Common shares outstanding plus shares underlying stock-based awards totaled 476 million on December 31, 2013, compared with 470 million one year ago.

Fourth Quarter 2013
Net sales increased 20% to $25.59 billion in the fourth quarter, compared with $21.27 billion in fourth quarter 2012. Excluding the $258 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales grew 22% compared with fourth quarter 2012.

Operating income increased 26% to $510 million in the fourth quarter, compared with $405 million in fourth quarter 2012. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $7 million.

Net income increased to $239 million in the fourth quarter, or $0.51 per diluted share, compared with $97 million, or $0.21 per diluted share, in fourth quarter 2012.

"It's a good time to be an Amazon customer. You can now read your Kindle gate-to-gate, get instant on-device tech support via our revolutionary Mayday button, and have packages delivered to your door even on Sundays," said Jeff Bezos, founder and CEO of Amazon.com. "In just the last weeks, Forrester, YouGov, and ForeSee have all ranked Amazon #1 - and we believe we're just scratching the surface of what world-class customer service can be."

Full Year 2013
Net sales increased 22% to $74.45 billion, compared with $61.09 billion in 2012. Excluding the $1.28 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales grew 24% compared with 2012.

Operating income increased 10% to $745 million, compared with $676 million in 2012. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the year on operating income was $29 million.

Net income was $274 million, or $0.59 per diluted share, compared with net loss of $39 million, or $0.09 per diluted share, in 2012.

Highlights
    Amazon announced a record-setting holiday season for Amazon Prime, the annual membership program with tens of millions of members worldwide. Amazon is working hard to increase capacity for the Prime program. In December, Prime was so popular that Amazon limited new Prime membership signups during peak periods.

    Prime Instant Video selection increased from 33,000 to more than 40,000 movies and TV episodes in 2013.

    Selection in the Kindle Owners' Lending Library in 2013 grew from 250,000 books to more than 475,000 books-books that Kindle owners with a Prime membership can borrow for free with no due dates.

    Amazon worked with the FAA to update its rules on the use of electronic devices on planes and now over 20 airlines allow customers to use their Kindles gate-to-gate.

    Amazon announced that on Christmas Day, the average response time when a customer tapped the Mayday button on Kindle Fire HDX was just 9 seconds, faster than the response time goal of 15 seconds. Thousands of Mayday Tech Advisors in the U.S. were available on Christmas Day to take calls from customers.

    Amazon announced a new version of Kindle FreeTime on Kindle Fire tablets that brings new educational features built from the ground up for parents and kids. The new features let parents set educational goals for their kids before switching to cartoons or games. Parents can also manage screen time with additional Time Limits features: set different limits for weekends vs. weekdays, and use "Bedtime" to set a curfew.

    Amazon announced a software update for the new Kindle Paperwhite that brings exclusive features including Goodreads integration and Kindle FreeTime.

    Amazon launched the Australian Kindle Store, offering over 2 million eBooks, including more than 400,000 Kindle-exclusive titles.

    Amazon launched Kindle MatchBook, a new benefit that gives customers the option to buy – for $2.99, $1.99, $0.99 or free – the Kindle edition of the print books they have purchased from Amazon, including more than 100,000 titles.

    Since its launch one year ago, Amazon AutoRip has delivered more than 2 billion digital music tracks to customers who have purchased AutoRip albums. The digital copy is automatically added to the customer's Cloud Player library where it is available, free of charge, for immediate playback or download.

    Amazon Instant Video announced it is working with the world's leading consumer electronics companies, top Hollywood studios and TV programmers, including Samsung, Warner Bros., Lionsgate, 20th Century Fox, Discovery and others to offer customers a premium 4K Ultra HD experience. In addition, Amazon Studios announced that it plans to shoot all 2014 full original series, including comedies and dramas, in 4K Ultra HD.

    Amazon Studios debuted new original series Alpha House and Betas. The first three episodes are available for all customers to enjoy, with the remaining episodes available exclusively on Prime Instant Video.

    Amazon Prime Instant Video will be the exclusive premium subscription home for Extant, a serialized drama starring Halle Berry and produced by Steven Spielberg's Amblin Television. The drama will premiere on the CBS Television Network in June with unlimited streaming of all the series' episodes available four days after their initial broadcast on CBS.

    Amazon launched AmazonSmile, a new program that makes it easy for customers to support their favorite charitable organizations every time they shop. Customers who visit AmazonSmile (smile.amazon.com) will find the exact same Amazon they know and love, with the added bonus that Amazon will donate a portion of the purchase price to their favorite charitable organization. There is no cap on the total donation amount and customers can choose from nearly one million organizations around the country.

    During the quarter, Amazon Web Services (AWS) announced over 100 new services and features, including Amazon AppStream, Amazon Kinesis, and three new Amazon Elastic Compute Cloud (Amazon EC2) instances. AWS now offers six Amazon EC2 instance families with 13 instance types to support a wide range of use-cases.

    AWS announced Amazon WorkSpaces, a fully managed desktop computing service in the cloud that allows end-users to access the documents, applications and resources they need with the device of their choice, including laptops, iPad, Kindle Fire, and Android tablets.

    The AWS Partner Network program, which provides technical, business and marketing support for the AWS partner ecosystem, has grown to more than 8,000 technology and consulting partners worldwide. In addition, AWS Marketplace now offers over 1,100 third-party software products for customers to choose from.

    AWS announced the upcoming launch of its China Region. This will be the fourth AWS Region in Asia Pacific and the tenth Region globally.

Financial Guidance
The following forward-looking statements reflect Amazon.com's expectations as of January 30, 2014, and are subject to substantial uncertainty. 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.

First Quarter 2014 Guidance

    Net sales are expected to be between $18.2 billion and $19.9 billion, or to grow between 13% and 24% compared with first quarter 2013.

    Operating income (loss) is expected to be between $(200) million and $200 million, compared to $181 million in first quarter 2013.

    This guidance includes approximately $350 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions, investments, restructurings, 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 EcommerceBytes Newsflash for more information about the earnings call, including the bombshell announcement that Amazon will likely be raising the membership fee of Amazon Prime Shipping.




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This user has validated their user name. by: Philip Cohen
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Thu Jan 30 17:16:52 2014

Not being an accountant, is there any possibility of a simple man's comparison of Amazon and eBay results?

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This user has validated their user name. by: NaruMessenger
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Thu Jan 30 19:44:38 2014

When you run a business like Jeff Bezos does it's a sucsess. If PayPal is spun off into its own entity, what's left of eBay Corp will be hauled off for scrap.  

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This user has validated their user name. by: ebayisajoke
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Fri Jan 31 00:36:35 2014

A simple man's comparison of Amazon and eBay results.

You go to a carnival and see a huge hot air balloon, a man giving rides, customers enjoying what their ride, they pay for more, they bring their friends. = AMAZON

A broken balloon with a dart hole in it from a small child that only won a toy frog. = EBAY

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This user has validated their user name. by: Ming the Merciless

Fri Jan 31 02:35:20 2014

Amazon showed reasonably good but not excellent results and issued very cautious guidance for Q1 full of lots of wiggle room.

It's impossible to make comparisons when the numbers that one party issued can't be trusted.

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This user has validated their user name. by: Rexford

Fri Jan 31 07:32:34 2014

I dropped my Prime membership a few months ago.  I'm glad I did.  I would not have paid the additional costs.

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by: RCL This user has validated their user name.

Fri Jan 31 08:18:12 2014

I dropped Prime too. The first 2 returns I tried to make were disasters. I buy a lot at Amazon, but I don't stream data, so it's not worth the price to me. I don't think there is any fair comparison between Amazon and eBay. Ming said it best.

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This user has validated their user name. by: Ina

Fri Jan 31 08:28:08 2014

Any thoughts from FBA sellers about cost of Prime going up?

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by: Orwellwasright This user has validated their user name.

Fri Jan 31 08:40:05 2014

Anyone who believes any of the data from A or E is a fool

If you have not figured out by now that all their figures are cooked, booked, hooked, shelaqued , massaged, twisted, bent and skewed to show whatever the fraudsters want, then its too late for you

While Amazon Is less vile in their business practices then pirates cove online(aka fraudbay), I give no more credence to their figures

Remember it Was A , who in the middle of the last xmas shopping season, garnered millions in free advertising by making the ridiculous claim of Drone shipping.

Also Long term it looks like there will be a federal minimum wage of at least 9 and probably 10$ per hour, So consider that in A's long term outlook

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by: Patricia This user has validated their user name.

Fri Jan 31 11:14:14 2014

I never bought into Prime though I've thought about it.  The $79 fee seemed awfully high for what you got and being I don't buy a heck of a lot each year it just wasn't justified.  Now, that they're raising their prime fee (only in the US???) its clear that its out of my budget.

Between raising the Prime fee and raising the basic price for free shipping...I can see the Amazon Gods selfish, greedy side coming out ;-)  They can't be all that successful if they are raising things past the point of affordability.

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This user has validated their user name. by: Ric

Fri Jan 31 12:47:39 2014

As a buyer, I see one big difference between eBay and Amazon and that is Amazon has found a way to monetize buyers by collecting fees albeit through an optional program.

Personally, I never saw the upside to Amazon Prime. I have always felt that if I need my widget that quickly, then I should be shopping in a retail store, not on the Internet.

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by: Orwellwasright This user has validated their user name.

Fri Jan 31 13:51:57 2014


The primary differance between E and A is E's use of the thuggish fraud enabler paypal

The continued use of this bullying device, used to control/punish/debase sellers is the reason E has such anemic pathetic growth, which is linked to fee increases and accounting tricks

Had E maintained a fair marketplace, A would be eating their dust, as it stands, the bullying and fraud have crippled the site.

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This user has validated their user name. by: Philip Cohen
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Fri Jan 31 15:48:19 2014

The bum has dropped out of Amazon's stock price: ~$359 at the moment; what's going on? ...

Oh, well, at least good ole clunky eBay is maintaining ~$53, but somewhat less than it was 10 years ago at ~$58 ...

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by: philly This user has validated their user name.

Fri Jan 31 16:20:56 2014

according to marketwatch:

"stocks remain on track to close out the biggest January drop for the S&P 500 since 2010. A string of disappointing earnings from the likes of Mattel Inc.     MAT 0.01%    and Amazon.com     AMZN     set the tone, while a profit warning from Wal-Mart Stores Inc.     WMT     didn’t help either."

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by: Luxferro This user has validated their user name.

Fri Jan 31 18:25:32 2014

Philip, maybe your love for Amazon is blinding you and you need to do a little more research and math. eBay stock split 2 for 1 three times and 3 for 1 one time since 1999.
Also, FY13 net income for Amazon was  $274M, while eBay's was $2.86B (about 10 times more than Amazon).

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This user has validated their user name. by: ebayisajoke
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Fri Jan 31 20:55:08 2014

I bought something on Amazon two days ago and it was delivered this morning at my door first thing. My item wasn't broke, and it arrived as described.

The last item I bought from a buyer on eBay never came because the seller's account got shut down for no reason, and he emailed me saying he wasn't going to ship it because of the interference on eBay's part.

Ecommerce interference should be against the law. I didn't fault the seller in this case, I was sympathetic to his unjust termination of his account because I am an Ebay critic but many others wouldn't be.

Ebay isn't digging themselves a hole, they are exploding it open with dynamite then jumping in.

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This user has validated their user name. by: Philip Cohen
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Fri Jan 31 20:56:08 2014

@Luxferro, Sorry I'm one of those naïve people who only look at the current stock price to make such comparisons; and what purpose do "stock splits" serve anyway, other than to dilute the value of the resulting greater number of shares for trading purposes? Certainly, there is no benefit to existing shareholders from such splits, so let’s do the stock splits for both companies ...

eBay: 3 x 2:1 and 1 x 3:1; ie 9x$53; equates to a current share price of ~$477
Amazon: 2 x 2:1 and 1 x 3:1; ie 7x$360; equates to a current share price of ~$2520

Then, in my naivety, maybe I’m missing something …

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This user has validated their user name. by: Ming the Merciless

Sat Feb 1 00:19:54 2014

@Philip Cohen

Stock splits can be an enormous asset to the long term investor in a well run corporation.

Initially you are correct in saying that splits devalue individual shares. Over time, however, in well managed corporations, the stock in most cases returns to its pre split share value.

A corporation that I had a few thousand shares in split three times while I owned it and each time the individual share price gradually returned and then exceeded the price per share at the time of the splits.

By holding this stock -- that incidentally paid nice quarterly dividends -- the final split made me a millionaire when a private family owned company bought this corporation and bought each share for twice its face value on the day the deal was consummated.

The Bush crash of 2008 lowered my net assets but they've bounced back and eventually will be OK.

So stock splits can be quite profitable when the company you've invested in is managed responsibly.

Contrast what I've just written with ebay.

No dividends.

No stock splits.

No long term growth.

Say NO to the HO.

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by: Luxferro This user has validated their user name.

Sat Feb 1 00:24:02 2014

Philip, you can't add the splits, as they compound. Then the dates of the split and value at split time come into play. You also have to look at the IPO price, time value of money for the stock to reach the high points, and an bunch of other factors.

So...Amazon might still be a better return today, I don't know. But what the Wall Street clowns think of companies doesn't concern me; where I make my money is what matters. At the end of the day, it is the one reason why people are or are not on one of these selling platforms.

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This user has validated their user name. by: Philip Cohen
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Sat Feb 1 14:15:44 2014

@Luxferro,

“Philip, you can't add the splits, as they compound. Then the dates of the split and value at split time come into play. You also have to look at the IPO price, time value of money for the stock to reach the high points, and an bunch of other factors.”

I’m sorry but that is a load arrant nonsense! You can simply total the splits and there is no compounding effect whatever …

Ignoring the psychology involved in the valuing of listed shares, and regardless of the number of times a share may have been split, the simple fact is, if, at any time, you simply double the amount of shares on issue, the value of the total number of shares does not increase and the value of the individual share is halved; no matter how many times you do a split the same math applies; to suggest otherwise is a nonsense, or voodoo stock marketing, maybe—like eBay financials …

The only reason for stock splitting is to keep the price of an individual share within a price range so that a standard parcel of stock is available to even the small stockholder for a reasonable sum; that may well marginally increase the demand for the stock and increase its price temporarily, but such splitting cannot in the long term outweigh the other more material factors that establish a stock’s value.

To believe that the value of an investment is going to be meaningfully improved simply because of stock splits is fanciful in the extreme; if stock splitting was otherwise going to add any permanent extra value to a stock, listed companies would be doing it all the time, ad nauseum …

@Ming, eBay has indeed had four stock splits since 1999, the latest a 3:1 in 2005 … http://getsplithistory.com/EBAY
Details of Amazon’s stock splits, the latest in 1999, at … http://getsplithistory.com/AMZN

And again, the summary thereof:
eBay: 3 x 2:1 and 1 x 3:1; ie 9 x $53; equates to a share value of ~$477
Amazon: 2 x 2:1 and 1 x 3:1; ie 7 x $360; equates to a share value of ~$2520

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This user has validated their user name. by: Ming the Merciless

Sat Feb 1 15:52:35 2014

Phil, you're correct about ebay's stock splits. I should have been clearer. None have occurred since The Ho's Reign of Terror began.

2005 was a parting gift for Negged Meg.

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