Amazon's first quarter results highlighted strong growth as well as big expenses. Simply put, Amazon is ramping up capital spending to support future growth.
Here are the six main items highlighted on Amazon's earnings conference call.
- Japan demand recovers somewhat after earthquake, but uncertainty remains. Amazon CFO tom Szkutak said
We certainly saw a pretty sizable slowdown for the few weeks ending the quarter. What we've seen since then so far quarter-to-date has been that, certainly, our growth rates have picked up, but they're not at the rates they were previous to the events.
- Amazon's Kindle and Prime are showing growth overseas.
- The company is going to spend heavily on fulfillment centers. Last year, Amazon launched 13 fulfillment centers with 9 slated this year. Szkutak said current growth rates indicate that Amazon will need to build more than 9 centers in 2011.
- Amazon Web Services is gobbling up capital expenditures. Szkutak said that Amazon has spent $1.1 billion on capital spending over the last 12 months. Eighty percent of that spending was on fulfillment including technology capacity for AWS.
- The state tax issue may not be that big of a deal. Amazon is posting some heady growth and is collecting taxes in half of the states.
- Amazon's advertising business is viewed as a way to lower prices for consumers going forward.