Amazon Growth Slows a Bit; No New Kindle in 2008

by Jim Milliot -- Publishers Weekly, 10/22/2008 10:17:00 AM

Amazon continues to out-perform most bricks-and-mortar stores, but its third quarter results showed that the e-tailer is not completely immune from the declining economy. Total sales rose 31% in the period, to $4.26 billion, while total media sales increased 19%, to $2.49 billion, and North America media revenue rose 15%, to $1.24 billion. All the sales gains are below the increased posted in the second quarter; the company said some of the reason for the slower growth was due to strong sales in July 2007 of Harry Potter and the Deathly Hallows. Net income jumped 48%, to $118 million.

The company gave a wide ranging forecast for fourth quarter sales, projecting gains of between 6% to 23%. Szkutak noted that growth did slow toward the end of the third quarter as the economic crisis heated up. Sales of products over $1,000 decelerated at the quarter. Both Szkutak and chairman Jeff Bezos said they are happy with their position in the marketplace as a low cost provider for consumers. Full year sales are expected to grow 24% to 31%, down from the guidance given in July when Amazon was expecting 2008 sales to increase 30% to 35%.

CFO Tom Szkutak said that while sales of the Kindle have exceeded expectations, it does not plan to release a new version of the e-reader until 2009 “at the earliest.” He noted that Amazon has ramped up manufacturing capacity for Kindle, and the device is in stock. When the Kindle was introduced last November, the readers quickly went out of stock. Amazon said the e-book reader now accounts for more than 10% of unit sales for books that are available both in digital and print formats. Bezos said purchase of e-books is “additive” to sales of print books with Kindle e-book buyers tending to buy as many print books in addition to e-books.