By Lisa Johnston
New products on display at the American International Toy Fair, held in N
SEATTLE — Amazon.com reported a 45 percent decline in net income, to $97 million, for the fourth quarter, ended Dec. 31, 2012, and lost $39 million for the full year, as it continued to build distribution centers, invest in fulfillment systems and expand its digital content.
Net sales rose 22 percent during the three-month holiday period, to $21.3 billion, which included $3.1 billion in fees and commissions from third-party sellers, a 47 percent increase year over year. The boost helped ease what senior VP and chief financial officer Thomas Szkutak described during a conference call as soft sales of TVs, MP3 players and digital cameras over the holiday quarter.
At the same time, the cost of sales increased nearly 17 percent to $16.1 billion, fulfillment costs rose 36 percent to $2.3 billion, and technology and content expenses skyrocketed 56 percent to $1.3 billion.
Last year Amazon opened 20 new distribution centers and grew its digital library to more than 23 million movies, TV shows, songs, magazines, books, audio books, apps and games — up from 19 million at year-end 2011 — reflecting new licensing agreements with Turner Broadcasting, Warner Bros. Domestic Television Distribution and A+E Networks. During the conference call, Szkutak said the company would spend even more on content going forward.
In North America, net sales rose 23 percent to $12.2 billion, and operating income increased 114 percent to $608 million. The latter figure contributed to a surge in Amazon shares in after-hours trading following the earnings announcement, briefly hitting an all-time high.
Sales within the catchall “CE and other general merchandise” category rose 24 percent to $8.5 billion in North America, while media sales, including books and digital content, climbed 13 percent to $2.9 billion.
In a statement, founder and CEO Jeff Bezos noted that e-books have become a multibillion-dollar category for the company, growing 70 percent last year compared with physical book sales, which rose just 5 percent. “We’re excited and very grateful to our customers for their response to Kindle and our ever-expanding ecosystem and selection,” he said.
For the full year, net sales rose 27 percent to $61 billion on a net loss of $39 million.
Kindle remained the company’s most popular product for the second year in a row in 2012, with Kindle Fire HD, Kindle Fire, Kindle Paperwhite and Kindle holding the top four spots on Amazon’s worldwide best-seller charts at year’s end.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.