Amazon: Big Kindle sales, but sales and outlook fall short

Amazon's fourth quarter sales and outlook fall short of expectations. Kindle sales surge.

Amazon's fourth quarter sales missed projections, but earnings were ahead. The big wild card was Kindle device sales, which tripled over the holidays.

The e-commerce giant reported earnings of $177 million in the fourth quarter, or 38 cents a share, on revenue of $17.43 billion, up 35 percent from a year ago. Wall Street was expecting earnings of 17 cents a share on revenue of $18.25 billion.

Also: Amazon's Q4: The Kindle Fire effect vs. more investment

How was Wall Street so mixed up? First, the Kindle Fire went on sale and analysts weren't sure what to expect in terms of margins.

Meanwhile, the outlook for the first quarter fell short of expectations. Amazon projected first quarter sales between $12 billion and $13.4 billion with a wide profit and loss range. Amazon projected an operating loss $200 million to a profit $100 million.

For 2011, Amazon reported earnings of $631 million, or $2.17 a share, on revenue of $48.98 billion, up 41 percent from a year ago. Just like the fourth quarter results, Amazon's revenue growth was strong, but earnings fell dramatically from a year ago.

On a conference call with analysts, Amazon CFO Tom Szkutak:

Our Q4 2011 capital expenditures were $550 million. The increase in capital expenditures reflect additional investments in support of continued business growth including investments in technology, infrastructure including Amazon Web services and additional capacity to support our fulfillment operations.

In a statement, Amazon CEO Jeff Bezos said "millions of customers" bought the Kindle Fire and other e-readers. As per Amazon custom, no hard numbers were disclosed.

The afterhours action looked like this:

By the numbers:

  • Product sales in the fourth quarter were $15.31 billion. Services sales were $2.12 billion.
  • Technology and content expenses in the fourth quarter were $862 million, up from $519 million a year ago.
  • North American sales were $9.9 billion in the fourth quarter with international revenue of $7.53 billion.

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