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Amazon.com is kicking you know what…
While soaring gasoline prices may be having a negative impact on sales in many sectors of the economy, internet retailers are deriving a benefit from fuel-conscious consumers as sales at many internet vendors are soaring.
Take Amazon.com for example. This goliath of the internet book biz sells millions of other products besides books. Amazon is currently raking in the cash from consumers who would rather point and click that fill it up. Here’s the story from the New York Times:
Strong Quarter for Sales at Amazon
By LAURIE J. FLYNN
High gas prices aren’t so bad after all — if you’re Amazon.com.
The online retailer’s profit doubled in the second quarter, as revenue rose 41 percent despite consumer anxiety about the economy.
“This is a very robust performance and it clearly shows that online selling is holding up very well even if consumer confidence is lower,” said Jeffrey Lindsay, an analyst at Sanford C. Bernstein. “Even if people are buying less over all, Amazon is benefiting.”
Amazon’s report, announced Wednesday, caps a week of largely mixed results from technology companies. EBay, the online marketplace, showed that it was not immune to the slumping economy when it reported last week that auction growth was slowing, although its profit continued to grow.
Jeffrey P. Bezos, Amazon’s chief executive, said the company appeared to prosper as more customers went online to shop instead of driving to stores. “Even just driving 10 miles to the store can mean a few dollars,” Mr. Bezos said in a conference call with analysts on Wednesday. “We think consumers are taking that into account.”
Mr. Bezos also said that more customers signed up for the company’s $79-a-year all-you-can-ship program, Amazon Prime, and that the company had no plans to change Amazon’s free-shipping policy on many items, despite rising gas prices.
Amazon’s net shipping cost rose to $128 million from $75 million in the quarter a year earlier, but company executives said that revenue from shipping increased as well, to $186 million from $152 million.
Amazon reported net income of $158 million, or 37 cents a share, up from $78 million, or 19 cents a share, in the second quarter of 2007.
Operating income rose 86 percent, to $217 million, which includes a $53 million noncash gain from Amazon’s sale of its European DVD rental assets and by the effect of the weak dollar.
Revenue rose 41 percent, to $4.06 billion, from $2.89 billion in the year-ago quarter. Excluding the benefit of exchange rates, Amazon’s sales would have been roughly $3.9 billion.
Shares of Amazon rose more than 8 percent in after-hours trading, when the earnings were released. They had gained 3.8 percent, or $2.57, to $70.54, in regular trading.
The results surpassed analysts’ forecasts of 26 cents a share on $3.96 billion in revenue, according to a survey by Thomson Financial.
Looking ahead, the company said it now expects sales of as much as $4.43 billion in the current quarter, or 36 percent higher than a year ago. For the full year, Amazon forecast sales of up to $20.1 billion.
Gross margin declined slightly to 23.8 percent from 24.3 percent, mainly because Amazon lowered prices on some items, said Tom Szkutak, Amazon’s chief finance officer.
North America sales, including Amazon’s American and Canadian sites, were up 35 percent from a year ago, to $2.17 billion, while international sales were up 47 percent, to $1.89 billion. But adjusting for the effect of exchange rates, international sales grew 34 percent.
“We don’t think we are a good barometer for the economy,” Mr. Szkutak said.
Amazon, which is based in Seattle, has been making considerable enhancements to its offerings in recent months, in search of new revenue opportunities. In April, it announced a new service, called TextBuyIt, that allows customers to shop for products via text messaging on their cellphones. Earlier, the company lowered the price of its Kindle electronic reading device by $40, to $359, hoping to bolster sales.
Last week it announced a movie-streaming service called Amazon Video on Demand and this week it announced a service for TiVo users to buy products they see promoted on TV talk shows.”
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Comments
By victor mickunas
July 27, 2008 1:52 PM | Link to this
I find Amazon is a great source for older books, even books that are out of print. There are thousands of “third party” book dealers who list their books on Amazon. Many are available for mere pennies plus shipping. I find that the convenience and availability of older books to be much to my liking.By Mike
July 25, 2008 2:21 PM | Link to this
It certainly is no wonder why they are successful. I just received 3 books today from Amazon. I shopped at 3 local chain bookstores last week for these books, hoping to get a deal somewhat close to Amazon’s prices. I was willing to pay a little bit more at the chain than Amazon because I wanted to have them right away instead of waiting for the shipping delay. Boy was I dreaming. I found that the three books were going to cost me $58.00 plus tax at the bookstores. My cost from Amazon-$28.40. The downside was I had to wait a week since I chose free shipping. To save $30 I’ll wait a week every time.By mackinac
July 25, 2008 8:08 AM | Link to this
Amazon is the best. Large selection, cheap, and fast! It has made shopping so easy, convenient, and painless. No fighting for a parking spot, not obnoxious teenagers, no ignorant clerks. This is why Amazon succedes where many other retailers fail. It’s good to know that Americans are still good at something.