Amazon CE Sales Soar 67% In Q2, But Profits Fall

By Alan Wolf -- TWICE, 7/26/2011

Seattle - Amazon.com CE sales soared 67 percent but equity-investment accounting losses led to an 8 percent decline in second-quarter earnings.

Net income was $191 million for the three months, ended June 30, while net sales rose 44 percent to $9.5 billion excluding the impact of favorable exchange rates.

In North America, sales of electronics and other general merchandise increased 67 percent to $3.5 billion.

In a statement, founder/CEO Jeff Bezos said low prices, expanding selection, fast delivery and innovation are fueling "the fastest growth we've seen in over a decade."

Also driving the gains were accelerating quarter-over-quarter sales of the company's Kindle e-book reader. The $139 3G version, with AT&T-sponsored screensavers, is currently its best-selling model, Amazon said.

The company also announced a deal last week with CBS that will allow Amazon Prime customers to stream 2,000 TV episodes at no additional cost, growing the total number of Prime instant videos to more than 8,000 movies and TV shows.

In response to Amazon's results, the Alliance for Main Street Fairness (AMSF), a brick-and-mortar lobbying group comprised of national big-box retailers, released a statement charging that "Amazon's business model is based on evading sales taxes and firing its small business partners to avoid playing by the same rules as brick-and-mortar retailers.The time has come for Congress to close the loophole that gives this multi-billion dollar company an unfair advantage over its Main Street competitors."

In a statement issued to TWICE, an Amazon spokesperson countered, "We collect sales tax or its equivalent in more than half of the areas where we do business, and our business is thriving in those areas."