Amazon: Shares tumble late as Q2 sales fall short; quiet about Kindle

Amazon made headlines this week by looking ahead with the announced acquisition of online shoe retailer Zappos. But the second quarter performance was all about the Kindle e-Book reader.

Amazon made headlines this week by looking ahead with the announced acquisition of online shoe retailer Zappos. But the second quarter performance was all about the Kindle e-Book reader.

The online retailer today reported second quarter net income of $142 million, or 32 cents per share, down from income of $158 million, or 37 cents, in the same quarter a year ago. Analysts had been expecting 31 cents. Revenue for the quarter was $4.65 billion, shy of the $4.69 billion that analysts had been expecting. Gross margins were 23.61 percent. (Statement)

During the quarter, the company reduced the price of the Kindle to $299 and launched a larger-screen Kindle DX for $489. Given the current economic conditions, there was some concern that consumers would have a tough time getting past the price tag on the new Kindle.

Despite the buzz surrounding the Kindle during the quarter, the company didn't offer any sales figures related to the Kindle - and frankly had very little to say about it at all - in the press release it issued today. In fact, it didn't mention the launch of the Kindle DX as a highlight from the quarter, choosing instead to list the Kindle price drop as a highlight.

Add to that the fact that they issued a day-before-earnings announcement of the Zappos acquisition and it becomes increasingly obvious that the company is not eager to talk about the Kindle. In a call with analysts, executive Rob Eldridge said the company doesn't break out specific sales figures but said the company is seeing "very good growth" and that Kindle sales are "exceeding our expectations."

Also see: Amazon Kindle's $489 price tag makes iPod Touch a better buy

In a statement, company CEO Jeff Bezos, said:

We’re pleased that customers saved more than $900 million with our free shipping offers, including Amazon Prime, over the last year. We’re staying heads down focused on providing customers low prices, vast selection, and fast delivery.

Other highlights from the quarter included:

  • Media sales worldwide were up 1 percent to $2.44 billion while Worldwide, Electronics & Other General Merchandise sales grew 35 percent to $2.07 billion while global Media sales were up 1 percent to $2.44 billion.
  • Sellers utilizing Fulfillment by Amazon more than tripled, compared to second quarter 2008, and the service has shipped more items year-to-date than in all of 2008.
  • The company launched its MP3 music service in France, offering more than 8 million DRM-free songs from all four major labels.
  • The Company launched a beta version of Amazon Wireless, a new website offering cell phones and service plans..
  • Amazon Web Services (AWS) launched a public beta of the several new features to make using the Amazon Elastic Compute Cloud (Amazon EC2) even easier for developers.

Looking ahead, the company said it forecasts third quarter sales to be between $4.75 billion and $5.25 billion,  an increase of 11 percent to 23 percent over last year's third quarter.

Shares of Amazon were up nearly 6 percent in regular trading, closing at $93.87. Despite being in line with eps expectations, investors disappointed with the revenue numbers pushed shares down nearly 10 percent in after-hours trading.

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