Online retailer Amazon reports drop in revenue
WASHINGTON - Online retailer Amazom reported revenue of $13.19 billion, down 24.4% sequentially from the seasonally supported fourth quarter and up 33.8% from $9.86 billion during corresponding quarter a year ago.
Analysts on an average were expecting Amazon to report earnings of 7 cents a share and revenue of $12.9 billion for the quarter.
It reported net income of $130 million, or 28 cents a share, compared with $201 million, or 44 cents a share, in the same period a year ago - a decline, but not as much as analysts feared.
"One of the big reasons for that growth is because of our digital offerings. Kindle and the total digital business is growing very strong," Tom Szkutak, Amazon's chief financial officer, said in a conference call with media.
Amazon has not performed as well as competitors like Apple and Netflix in other categories like music and movies.
In the quarter, the company reported operating income of $192 million, down from $322 million last year.
The company's 15-year history has been replete with its willingness to invest heavily in initiatives that promise future gains while eroding s profits in the short term. That cycle, though, has repeated itself often enough such that analysts have come to expect it in normal course.
The company's founder and chief executive Jeff Bezos remains unapologetic about that approach, saying the company favors serving a huge audience of customers while delivering thin profit margins to investors over producing bigger profits from a smaller audience.
The Seattle headquartered internet retailer is in the midst of a major expansion to gear up for transition of media from physical to electronic delivery. Its delivery of books through its Kindle business is one such successful initiative.
During the quarter, revenue from its media business in North America increased 17 per cent to $2.2 billion as compared to the 8 per cent growth posted in that same business during the last quarter.
Last year, Amazon introduced its $199 Kindle Fire tablet with mixed reviews and is believed to be a money-loser so far. Amazon does not release sales results for any of its devices.
During the first quarter, the company said nine out of the top 10 best-selling products on Amazon were digital products, including Kindles, Kindle books, movies, music and apps.
Around 56% of sales were generated in North America, representing a sequential decline of 25.0% and a year-over-year increase of 35.9%. The balance came from the International segment, which dropped 23.5% sequentially and grew 31.1% year over year (32% excluding unfavorable currency impact).
The active customer accounts increased by 9 million to 173 million, while the active seller accounts stayed above 2 million. Paid (third-party) units were 39% of total units in the first quarter, compared to 36% in the third.
Key strategies for driving revenue growth remain a vast selection, competitive pricing, free shipping, user experience on Amazon properties and the Amazon Prime program.
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