On Thursday, Amazon said its second-quarter profit rose 45 percent from the same period a year ago as revenue grew 41 percent. ... Net income at Amazon was $207 million, or 45 cents a share, up from $142 million, or 32 cents a share a year earlier. Revenue was $6.57 billion, up from $4.65 billion in the recession-mired quarter last year. ...
Shoppers are still flocking to Amazon, in large part because it usually offers lower prices, but its pricing is also cutting into its profit margins, said Jordan Rohan, managing director of Internet and digital media equity research at Stifel Nicolaus.
“If consumers are retrenching, it’s quite possible that Amazon’s gaining share because they’re the low-price player and they’re pressing that advantage, but there’s a trade-off between margins and growth for retailers,” Mr. Rohan said. “Amazon is clearly selecting a page out of Wal-Mart’s playbook.”
Amazon is also spending a lot more money to keep up with its growing sales, said Thomas J. Szkutak, Amazon’s chief financial officer. Operating expenses increased 40 percent from the year-ago quarter. The company is building 13 new retail fulfillment centers and adding office space, and it hired 2,200 people during the quarter, mostly to support increased sales volume, he said.
Amazon quelled fears that Apple’s iPad, which started sales in April, would threaten sales of the Kindle, Amazon’s e-reader. Instead, there are signs that three years after Amazon released the Kindle, e-book and e-reader sales are beginning to make a real contribution to the company’s earnings.
Get it? In an economy that is still a basket-case Amazon was able to make very significant investments in expansion while at the same time increasing profits 45%.
