Amazon.com sales leap but profits weighed down
SAN FRANCISCO: Amazon on Tuesday reported that its profit slipped as revenue leapt on hot sales of Kindle electronic readers subsidized by advertising.
Amazon profit was weighed down by expenses related to beefing up the companyâ€™s operations and developing new products.
Amazon said revenue in the recently ended quarter jumped 51 per cent to dollar 9.91 billion but net profit fell eight percent to dollar 191 million in comparison with results logged in the same period last year.
â€œLow prices, expanding selection, fast delivery and innovation are driving the fastest growth weâ€™ve seen in over a decade,â€ Amazon.com founder Jeff Bezos said in a release.
He noted that Kindle 3G with Special Offers priced at dollar 139 has become the Seattle-based online retailerâ€™s top selling e-reader since being released two weeks ago.
The cut-price version of Amazonâ€™s Kindle 3G electronic reader is sponsored by US telecom carrier AT&T. The same e-reader without on-screen ads is priced at dollar 189.
In May, Amazon began selling Wi-Fi-only Kindles featuring advertising and discounted prices. The AT&T version lets users download books wherever there is mobile telephone coverage.
The company has declined to comment on recent reports that it plans to unveil a tablet computer by the end of the year in a bid to carve out a slice of a growing market dominated by Appleâ€™s iPad.
Amazon is also rumored to be poised to release new Kindle models.
â€œWe will not talk about what we might or might not do,â€ Amazon chief financial officer Tom Szkutak said when asked about tablet computer plans in an earnings conference call.
He said the company has been investing heavily to support its tremendous growth.
Amazon added about 5,300 workers in the quarter and has ramped up the number of warehouses it is adding to its retail network, according to Szkutak.
Amazon is also investing in China where the business is growing fast.
â€œWe are very pleased with our business in China,â€ Szkutak said.
â€œWe are in investment mode in that country,â€ he continued. â€œIt is a very interesting long-term opportunity.â€
Amazon projected that sales in the current quarter would tally between dollar 10.3 billion and dollar 11.1 billion in results that would top the same quarter last year by 36 per cent to 47 per cent.
Amazonâ€™s earnings bested Walls Street expectations and the companyâ€™s stock price rose more than six percent to dollar 227.80 in after-hours trading that followed release of the results.