Amazon posted its usual big jump in top line sales, with the third quarter revenue increasing 38.7%, to $7.56 billion, while net income rose 16%, to $231 million. The largest gains came in its electronics and other general merchandise segment where sales rose 68% overall and 80% in North America. The segment, which benefited from acquisitions (Zappos), is home to sales of the Kindle. Media sales grew at a much more modest rate, up 14% in total and 13% in North America.
Within North America media, Amazon said unit sales of both print and digital books accelerated in the third quarter compared to the second period, with strong overall book gains. The company had some softness in music and video sales.
Amazon said the new generation of Kindles “are the fastest selling Kindles of all time and the bestselling products on Amazon.com and Amazon.co.uk.” The number of e-books in the Kindle store grew to 720,000 during the quarter and Amazon said that 590,000 of those are priced at $9.99 or less. Asked whether he thought e-book prices would remain closer to $9.99 than $15, CFO Tom Szkutak fell back on Amazon's usual stance of saying the company believes prices should be as low as possible for consumers and that Amazon continues to work hard to keep prices as economical as possible. He declined to say if the entire Kindle business, both devices and e-books, improved Amazon's overall operating margins.
For the first nine months of the year, media segment sales were up 19%, while egm category results rose 69%. In North America, media sales increased 17%, while egm jumped 76%.
The online retailer is expecting a blowout fourth quarter in terms of sales with revenue projected to increase between 26% and 40%, although it said that operating income could be anywhere from down 24% to up 18%. Earnings are being impacted in part by Amazon's need to add more warehouses across the globe. Amazon has lots of capacity "and we will add more to meet the demand n front of us," Szkutak said.
