Amazon Q4 2012 Earnings: Sales of $21B, Profits Drops

The world's largest online retailer Amazon has announced its fourth quarter earnings for 2012, with the firm's sales increasing but it also saw a considerable decrease in profits.

Amazon's net profit dropped by 45 percent to $97 million, or 21 cents per share. Comparatively, it generated $177 million, or 38 cents a share, for the fourth quarter of 2011.

In the last quarter of 2012 ending on December 31, Amazon enjoyed sales growth of 22 percent to $21.27 billion. However, the figure fell short of the average earnings estimate of 29 cents-per-share. Operating margins, meanwhile, increased from 1.3 percent to 1.9 percent.

Amazon expects revenue between $15 billion and $16.6 billion during the first quarter of 2013, which would represent a 14 percent or 26 percent increase when compared to revenue generated in the first quarter of 2012. It also forecasts a loss of $285 million loss and profit of $65 million. During the Q1 of 2012, it generated $192 million in operating profit.

"We're now seeing the transition we've been expecting," said CEO Jeff Bezos. "After 5 years, eBooks is a multi-billion dollar category for us and growing fast -- up approximately 70% last year. In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5%. We're excited and very grateful to our customers for their response to Kindle and our ever expanding ecosystem and selection."

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  • BoredErica
    For some reason, I get some level of contentment having actual physical books on my bookshelf - maybe to show others I actually read. :)

    I still like Amazon though. It hasn't failed me thus far.
  • schwiing
    perhaps sales are down due to sales tax being implemented in many states
  • pacomac
    If you sell millions of Android tablets at cost it is going to damage your profitability!
  • bustapr
    no, selling tablets at cost isnt going to damage your overall income because they arent losing any money by selling them. its a brilliant marketing move to get more people looking at their site, which logically, would turn into more sales. Id put my bet profits went down because of the sales tax implementation as well.

    remember they arent actually losing money, theyre just making less money.
  • NuclearShadow
    schwiingperhaps sales are down due to sales tax being implemented in many states
    You are correct and this is one of the reasons why they fought so hard against it. I buy from Amazon quite often but if I had to deal with taxes they will either have to drop prices to make up for it or lose my business. One of the appeals of online shopping is lower prices and part of that comes from the lack of taxes. Without it I may as well just drive for a few minutes and buy what I want and have it that day. The TV I bought a while back would have added about $60 in taxes and would have had me wait for shipping, there would have been no point in me buying it from Amazon like I did.

    And you know this isn't purely a desire to collect taxes issue surely the retail companies like Wal-Mart know this and have their lobbyists make it clear that is their desire as they make campaign contributions. Using this form of legal bribery to maintain dominance in the market.
  • bak0n
    schwiingperhaps sales are down due to sales tax being implemented in many statesBut wait. Taxing people more IMPROVES economic growth! This just doesn't make sense!
  • jerrspud
    you're all wrong. Sales are up & profit is down. Nothing do to with sales tax, otherwise sales would be down

    They paid off some debt at 156M and spend 2B on "Purchases of property and equipment, including internal-use software and website development " that had a pretty big impact on profit.