Amazon Q3 Earnings Fall 73%; Kindle Orders On Fire

Alan Wolf -- TWICE, 10/26/2011

Seattle - Amazon.com said third-quarter profits fell 73 percent to $63 million and projected as much as a 142 percent decline in fourth-quarter operating income as the e-tailer ramps up investments in infrastructure and capacity.

Third-quarter net sales rose 44 percent to $10.9 billion, while net sales in North America rose 44 percent to $5.9 billion and operating income fell 23 percent to $144 million for the three months, ended Sept. 30. Sales of electronics and other general merchandise rose 56 percent in North America to $3.6 billion, and sales of media increased 21 percent to $1.9 billion.

 On a conference call, chief financial officer Tom Szkutak said higher operating expenses impacted earnings during the period and will do so again next quarter. The higher costs reflect increased investments in capacity and retail infrastructure to support what he described as "the best growth rates since 2000."  Expenditures included the opening of 15 new fulfillment centers, the planned opening of 17 additional fulfillment facilities, last month's launch of four new Kindle models, and investments in Amazon's digital content business, he said.

In a statement, Amazon CEO/founder Jeff Bezos said the company is building "millions more" Kindle Fires than previously planned based on pre-orders, and that orders for the three new E Ink-based models are double the previous launch.