Kindle Drives Amazon to Big Third Quarter
By Jim Milliot -- Publishers Weekly, 10/22/2009 2:06:00 PM
Judging by Amazon’s third-quarter results, the e-tailer can carry on its price war with Wal-Mart and others for a long time. Total sales for the company rose 28%, to $5.45 billion, in the quarter ended September 30 (and increased 29% excluding exchange rates). Operating income jumped 62% (69% excluding exchange rates), to $251 million. The results appear to have been driven by the Kindle. Although no sales figures were released, Amazon chairman Jeff Bezos said in a statement that the e-reader “has become the #1 bestselling item by both unit sales and dollars—not just in our electronics store but across all product categories on Amazon.com. It’s also the most wished for and the most gifted.”
Kindle sales are included in Amazon’s North America electronics and other general merchandise segment, and revenue there rose 36%, to $1.29 billion. Sales in the North America media segment, home to books, e-books and other media products, rose 13.4%, to $1.41 billion, a marked improvement over results in the prior two quarters. Worldwide media sales increased 17.4%, to $2.93 billion. Within the North America media segment, Amazon said sales growth in all its product categories increased in the quarter compared to the second quarter. Improvement over last year's third quarter reflects the softening that took place toward the end of the 2008 period as the recession began to deepen.
Executives gave no hint about how long the price wars could last, deflecting a question about what impact lower prices might have on book margins by observing that the company doesn't focus on margins by product, but for the entire company. Execs repeated that Amazon operates in a competitive environment and that it remains focused on doing what is best for the customer, which includes low prices.
Asked what the hurdles may be to adding foreign-language titles to the international Kindle, Amazon execs said foreign language e-books represent an opportunity for the company, but offered no specifics other than repeating that the Kindle's long-term goal is to have all titles in all languages.
Amazon said it is optimistic about the fourth quarter and sees no signs of a sales slowdown; revenue is projected to increase between 21% and 36% over last year’s final period.
