Amazon profits down in Q4 2011 despite Kindle success

Amazon profits down in Q4 2011 despite Kindle success
Amazon has just announced its financial results for the fourth quarter of 2011 and despite sales of Kindles nearly tripling over the Holidays, the company’s profits were down and profit margins were very tiny. Amazon’s net income stood at $177 million, down 58% year-over-year. Just as before, though, the company gave no hard numbers about Kindle sales, so that relative growth gives us little idea about actual sales.

With total sales growing by 35% to $17.4 billion that profit margin just looks very, very slim. Part of the reason is that Amazon is selling its Kindle Fire at about the price it manufactures it for, or at a slight loss. The outlook for the next quarter is not rosy either - the company expects profits of up to $100 million in the best case scenario and loss of as much as $200 million in the worst one.

“We are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices this holiday season, making Kindle our bestselling product across both the U.S. and Europe,” said Amazon CEO Jeff Bezos. “Our millions of third-party sellers had a tremendous holiday season with 65% unit growth and now represent 36% of total units sold.”

When it comes to mobile, the Amazon Appstore grew nearly three-fold in the last quarter sequentially. In Q4 2011, customers downloaded more apps from the Appstore than they have for the previous three quarters of the year. 

Not surprisingly, with Kindle Fire being among the most popular Android tablets, Amazon’s content service enjoyed healthy growth with Instand Video customers doubing and Prime Instand Video streams surging 300%.

Amazon’s sales for the whole of 2011 grew up by 41% to $48.08 billion from $34.20 billion in 2010. 

source: Amazon


1 Comment

1. fervid

Posts: 183; Member since: Nov 22, 2011

Is anyone besides politicians making money this year? Best Buy and other retail claim online sales stole from them, and now online retail are claiming they didn't make any money either???

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