Amazon’s Q1 profit beats estimates

Slowing media sales growth offset by surge in electronics, other goods

By Danny King -- Video Business, 4/23/2009

APRIL 23 | Amazon.com's first-quarter earnings beat analyst expectations as a slowdown in growth of media items such as DVDs and CDs was more than offset by increased demand for electronics products and other items.

Net income was $177 million, or 41¢ a share, up from $143 million, or 34¢ a year earlier, as sales rose 18% to $4.89 billion, Amazon said in a statement today. The company was expected to earn 31¢ a share on sales of $4.76 billion, the average analyst estimate in a Thomson Reuters survey.

Along with companies such as Netflix and Blockbuster, Amazon, which doesn't break out sales of specific media categories, has been looking to maintain media sales growth by trying to attract customers to its digital delivery service. Last July, Amazon replaced its Unbox video-download service with a video-on-demand service that allows customers to stream television and movie content.

"The strategy is very simple: to keep improving the customer experience of video on demand relentlessly, and at the same time make it very easy for partners to intergrate the video on demand service into their set-top boxes," Amazon Chief Executive Officer Jeff Bezos said on a conference call with analysts today.

Last month, Amazon started making its inventory of 40,000 video-on-demand titles available for streaming directly to television sets through Roku set-top boxes. Amazon's titles were already available for download onto TiVo digital video recorders and other set-tops.

Still, Amazon's media sales increased 7% from a year earlier, marking a slowdown from the 9% growth rate in the fourth quarter.

Earlier this week, Amazon started offering about 500 digital titles in high definition that can be streamed directly to Internet-connected Sony and Panasonic set-top boxes as well as through Roku players and TiVo DVRs.

Bezos said today that it was unlikely that Amazon would start a subscription-based video on demand service similar to Netflix, noting that while it was feasable from a technology standpoint, the inventory of available digital titles would be far smaller than under Amazon's current a la carte offering.

Amazon shares were up about 2% in extended trading today.