Amazon reported big gains in revenue for both the fourth quarter and the full year but, as it had predicted, earnings in both periods fell. In addition, North America media segment, home to books and e-books, sales rose only 8% in the quarter, much slower than the 16% increase posted for the year. Amazon attributed the slowing rate to soft sales of video games, saying that unit sales of print books in the quarter rose by double digits while sales of digital content, including e-books, had "very strong" growth. The electronic and general merchandise segment that includes the Kindle devices posted a 51% fourth quarter increase and a 57% gain for 2011.

Analysts hammered away at the slow North America media growth. In addition to weak video game sales, Amazon said increasing third party sales, for which Amazon only records the commission on the sale, also played a role in slowing growth. Worldwide third party sales accounted for 36% of all unit sales and helped the company's bottom line do better than expected. Amazon said it was very pleased with the growth in print book sales given the large gains posted by e-books.

Total sales in the fourth quarter increased 35% to $17.43 billion, while operating income declined to $260 million from $474 million in fourth quarter 2010. For the full year, total revenue rose 41%, to $48.08 billion, compared with $34.20 billion in 2010. Operating income decreased 39% to $862 million, compared with $1.41 billion in 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the year on operating income was $53 million.

Highlights for the fourth quarter, according to Amazon, included a 177% increase in Kindle unit sales in the holiday period, with the Fire Amazon’s bestselling product. The company also said it has over 80,000 titles now in the Kindle Owners’ Lending Library program.

Amazon’s guidance for the first quarter included more solid growth--sales are expected to be between $12.0 billion and $13.4 billion, or to grow between 22% and 36% compared with first quarter 2011--and more bottom line declines--with Amazon forecasting earnings to range between an operating loss of $200 million and earnings of $100 million, or between 162% decline and 69% decline compared with first quarter 2011.