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International media sales, including DVD, a contributor
By Ned Randolph -- Video Business, 10/23/2007
OCT. 23 | Amazon.com today reported one of its best quarters ever, with a 313% rise in net income in the period that ended on Sept. 30.
The online retailer attributed its success in part to international media sales, such as DVDs, which grew 36% to $2.09 billion in the third quarter, compared to $1.54 billion last year.
Amazon also was pleased with its electronics and general merchandise sales, which accounted for $1.08 billion in the quarter, an increase of 54% over the same period in 2006.
Harry Potter was also good to the retail giant, with J.K. Rowling's final installment, The Deathly Hallows, becoming Amazon's best-selling new product release, with 2.5 million copies sold.
"Customers continue to respond to our low prices, our free shipping and the benefits of Amazon Prime. With our ever-increasing selection, customers are now getting this unusual level of service across many different product categories and with depth of selection in each category," said Jeff Bezos, founder and CEO of Amazon.com. "In our view, putting customers first is the only reliable way to create lasting value for shareowners."
In a conference call with analysts, Amazon executives said they expected the strongest toy category performance for the upcoming holiday season.
Bezos was upbeat on the company's new offerings of MP3 digital music sales as well as the company's Unbox video downloads.
He said there was not yet any evidence that either were "cannibalizing" DVD or CD sales.
"It's too early to know whether we would see any of that," he said.
He said it was a matter of figuring out what customers want and "repeating it consistently over a number of years. We're thrilled with the early results."
Bezos said Amazon is trying to convince music labels that DRM-free music is good for the industry as a whole.
"We're very happy with the early results we're seeing and getting terrific feedback from customers," Bezos said about the digital content. "Everyone loves the DRM-free format."
Amazon's net income increased 313% to $80 million or 19¢ per diluted share, compared with net income of $19 million, or 5¢ per diluted share in third-quarter 2006.
Operating income was $123 million, a 207% increase over $40 million in third-quarter 2006.
Net sales were $3.26 billion, a 41% increase from $2.31 billion in the third quarter of 2006.
The company also benefited from favorable currency exchanges, which accounted for $75 million.
North American sales were $1.79 billion, up 42% from the period last year.
In the upcoming quarter, the company said it expects net sales to be between $5.1 billion and $5.45 billion, a 28% to 37% increase over fourth-quarter 2006.
On the year, Amazon said it expects net sales between $14.263 billion and $14.613 billion, or 33% to 36% over 2006.
On the good news, Amazon shares shot up 10%, but dropped slightly more to $90 in after-hours trading.
