Amazon posts sharp rise in sales in Q3

24-10-2007

by Ciara O'Brien

Amazon enjoyed a buoyant third quarter with sales surging and net profit beating analysts' expectations.

Net sales grew 41 percent to USD3.26 billion during the quarter, compared to USD2.31 billion a year earlier. Revenue was boosted by the release of the final Harry Potter book, "Harry Potter and the Deathly Hallows", of which the company sold 2.5 million copies; when the popular book's sales were excluded, Amazon saw a 35 percent rise in sales.

Net income during the quarter rose to USD80 million, or USD0.19 per share, up from USD19 million, or USD0.05 per share during the same period a year earlier. Operating income, meanwhile, increased 207 percent to USD123 million, compared with USD40 million last year. Analysts had been expecting average revenue of USD3.14 billion and earnings per share of USD0.03.

By region, North America segment sales still outperformed the international division, with USD1.79 billion and 42 percent year-on-year growth compared to USD1.47 billion and 40 percent growth overseas.

The quarter also saw Amazon expand its business to include a beta of digital music store Amazon MP3; shoes and baby stores on the UK and German Amazon sites; a Home & Kitchen store on the French Amazon website; and clothing on the Japanese site.

Looking forward to the fourth quarter, Amazon is predicting fourth-quarter sales of between USD5.1 billion and USD5.45 billion.

However, it wasn't enough for the markets. It seems that investors have high expectations from the online retailer, and following the release of the results, Amazon's shares slipped 8 percent. For the fourth quarter, analysts are predicting average revenue of USD5.16 billion.

Amazon established a computer support division in Dublin in 2005, creating 25 jobs in the process, and in March 2006 announced plans to hire 450 people for a customer services centre in Cork.