Amazon announces Q4 2011 earnings; all Kindle sales up 177 percent

Amazon today released its fourth-quarter 2011 earnings numbers. Net revenue was up 41 percent year over year to $48.08 billion, but net income fell 45 percent to $631 million.

Amazon's already said that the Android-based Kindle Fire is its "best selling," "most wished for" and "most gifted device" of the 2011 holiday season, but until today it had yet to give any actual numbers. That trend continued today, though Amazon did announce that sales of all its Kindle products -- including the tablet and e-readers -- were up 177 percent over Q4 2010. Of course, the Kindle Fire didn't exist then, so large growth wouldn't be unexpected.

The Amazon Appstore did well for itself in the three months ending Dec. 31, 2011, however. Amazon says Appstore customers nearly tripled for the quarter, and than more apps were downloaded in those three months than in all previous quarters combined. The Appstore launched in March 2011.

A conference call is coming up -- we'll listen in for anything worthwile. Full presser's after the break.

SEATTLE--(BUSINESS WIRE)-- Amazon.com, Inc. (NASDAQ:AMZN - News) today announced financial results for its fourth quarter ended December 31, 2011.

Operating cash flow increased 12% to $3.90 billion for the trailing twelve months, compared with $3.50 billion for the trailing twelve months ended December 31, 2010. Free cash flow decreased 17% to $2.09 billion for the trailing twelve months, compared with $2.52 billion for the trailing twelve months ended December 31, 2010.

Common shares outstanding plus shares underlying stock-based awards totaled 468 million on December 31, 2011, compared with 465 million a year ago.

Net sales increased 35% to $17.43 billion in the fourth quarter, compared with $12.95 billion in fourth quarter 2010. Excluding the $101 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 34% compared with fourth quarter 2010.

Operating income was $260 million in the fourth quarter, compared with $474 million in fourth quarter 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $5 million.

Net income decreased 58% to $177 million in the fourth quarter, or $0.38 per diluted share, compared with net income of $416 million, or $0.91 per diluted share, in fourth quarter 2010.

“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 Jeff Bezos, founder and CEO of Amazon.com. “Our millions of third-party sellers had a tremendous holiday season with 65% unit growth and now represent 36% of total units sold.”

Full Year 2011

Net sales increased 41% to $48.08 billion, compared with $34.20 billion in 2010. Excluding the $1.09 billion favorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales would have grown 37% compared with 2010.

Operating income decreased 39% to $862 million, compared with $1.41 billion in 2010. The favorable impact from year-over-year changes in foreign exchange rates throughout the year on operating income was $53 million.

Net income decreased 45% to $631 million in 2011, or $1.37 per diluted share, compared with net income of $1.15 billion, or $2.53 per diluted share, in 2010.

Highlights

During the nine-week holiday period ending December 31, 2011, Kindle unit sales, including both the Kindle Fire and e-reader devices, increased 177% over the same period last year.
Kindle Fire is the #1 bestselling, most gifted, and most wished for product across the millions of items available on Amazon.com since its introduction 17 weeks ago.
Amazon launched Kindle Stores at Amazon.it and Amazon.es. Kindle moved to the top of the bestseller list on launch day in both countries and held the top spot this holiday season. The new Kindle was also the bestselling product on Amazon.co.uk, Amazon.de and Amazon.fr.
Amazon.com announced the Kindle Owners’ Lending Library, a benefit of Prime membership that offers over 80,000 books to borrow for free – including over 100 current and former New York Times bestsellers – as frequently as a book a month, with no due dates.
Kindle Direct Publishing (KDP) announced KDP Select, an annual fund of at least $6 million dedicated to independent authors and publishers who participate in the Kindle Owners’ Lending Library. In December alone, customers borrowed 295,000 KDP Select titles, and KDP Select has helped grow the total library selection of books by over 16X.
Amazon continued to expand its catalog of title offerings for Prime Instant Video, announcing licensing agreements with Twentieth Century Fox Television Distribution, which added the popular FOX and FX television shows Glee and Sons of Anarchy, and Disney-ABC Television, which added popular television shows including Lost and Grey’s Anatomy. These deals bring the total number of Prime Instant Videos to more than 13,000 movies and TV shows from partners such as CBS, Fox, NBCUniversal, Sony, Warner Bros., PBS, ABC-Disney and many more.
The number of videos purchased or rented from Amazon Instant Video and the number of Amazon Instant Video customers both more than doubled year-over-year in the fourth quarter. In addition, the number of Prime Instant Video streams increased nearly 300% in the fourth quarter compared to the third quarter.
Amazon Appstore for Android customers nearly tripled in the fourth quarter compared to the third quarter. In addition, customers downloaded more apps from the Amazon Appstore during the fourth quarter than they had during all previous quarters combined.
North America segment sales, representing the Company’s U.S. and Canadian sites, were $9.90 billion, up 37% from fourth quarter 2010.
International segment sales, representing the Company’s U.K., German, Japanese, French, Chinese, Italian and Spanish sites, were $7.53 billion, up 31% from fourth quarter 2010. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 29%.
Worldwide Media sales grew 15% to $6.01 billion. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 14%.
Worldwide Electronics and Other General Merchandise sales grew 48% to $10.91 billion. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 47%.
Amazon Web Services (AWS) announced the launch of its new South America (Sao Paulo) Region and U.S. West (Oregon) Region, bringing the total to eight geographic regions worldwide to which the company has deployed its global cloud computing services.
AWS announced the launch of Amazon DynamoDB, a fully managed NoSQL database service that provides extremely fast and predictable performance with seamless scalability. With a few clicks in the AWS Management Console, customers can launch a new Amazon DynamoDB database table, scale up or down their request capacity for the table without downtime or performance degradation, and gain visibility into resource utilization and performance metrics.
AWS announced that customers can now run their Microsoft Windows Server applications within the AWS Free Usage Tier – a program designed to help new AWS customers get started in the cloud. Developers and businesses with Windows Server applications can take advantage of 750 hours of Amazon Elastic Compute Cloud (Amazon EC2) Micro Instance usage per month, at no charge for a one-year period.

Financial Guidance

The following forward-looking statements reflect Amazon.com’s expectations as of January 31, 2012. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce and the various factors detailed below.

First Quarter 2012 Guidance

Net sales are expected to be between $12.0 billion and $13.4 billion, or to grow between 22% and 36% compared with first quarter 2011.
Operating income (loss) is expected to be between $(200) million and $100 million, or between 162% decline and 69% decline compared with first quarter 2011.
This guidance includes approximately $200 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions or investments are concluded and that there are no further revisions to stock-based compensation estimates.

A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and will be available for at least three months at www.amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

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