Amazon 2012 Q4: more wind in their “sales”
Amazon has announced their fourth quarter (Q4) results for 2012…and their sales were up 22% over Q4 2011!
It’s always hard to communicate how big a jump that is for an industry leader. Again, we are just talking about sales right now.
Yes, their GAAP (I presume that’s Generally Accepted Accounting Principles) Net Income was down 45% in a year to year, but as usual, this is Amazon investing in the future.
You can listen to the webcast of the announcement
and also download the slide deck (which some of you will want to view, to see the details.
This one might be well received by the stock market, although I don’t think I’m great at predicting that. The timing of the announcement (which was set in advance) is good, though. Everybody seems to be running the story that Barnes & Noble sees themselves closing stores steadily for the next ten years
(WSJ: “B&N Aims To Whittle Its Stores For Years”). People have buzzed concerns about Apple and Netflix, which can both be seen as competitors for Amazon (but really, who isn’t a competitor for Amazon?) 
Listening to the Q&A, it was interesting to me that the first questions were more about fulfillment centers. That’s important, of course, but investors on the call didn’t go right for Kindles or sales tax, which have both been big topics in the past.
One question did have to do with whether Kindle owners buy more directly from Amazon than, say, Amazon apps on other devices. The response was that there was “very good progress” on digital media. Prime membership has increased dramatically, and people are watching a lot more of the free Prime videos…and they pay for new content more. Autorip was mentioned as well.
They said specifically they couldn’t keep up with demand on the Paperwhite in Q4 2012, and that they could have sold more if they had more.
They mentioned that they plan to spend more on expanding Amazon Instant Video.
By the way, I recently watched an episode of Bloomberg Game|Changers about Jeff Bezos. I thought it was fun, especially to see the childhood pictures, 
but also to hear other people talking about Amazon’s CEO. Ironically, I couldn’t find it for you on Amazon, but you can watch it on Netflix:
http://movies.netflix.com/WiMovie/Bloomberg_Game_Changers_Jeff_Bezos/70219867?trkid=2361637
Based partially on that, I would say that investors shouldn’t figure that Amazon is going to get to some point and then just sit back and make profits. They are going to keep it scary for some time…as it has always been for pioneers.
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.
January 30, 2013 at 3:09 am |
Interesting video about Jeff – one amazing person! And I believe he’s so successful because he’s having fun! It’s like they say – if you can find something you like to do, it won’t feel like a job. And now he’s a gazillionare!
January 30, 2013 at 2:06 pm |
Thanks for writing, Pam!
I’m glad you enjoyed it! I’ve pretty much always had fun in my jobs. As a manager, I’ve pointed out to people that you spend more time awake at your job than you do awake at home…if you aren’t finding some enjoyment in it, that seems like…perhaps a lost opportunity is best. I know people can’t easily change jobs, but they can change their attitudes about their jobs.
January 30, 2013 at 7:50 pm |
I had a couple of takeaways from the earnings call — more from the questions than the answers (which seemed a little more non-responsive than usual
).
First it appears that with all the new fulfillment centers coming online, it seemed that the delivery expense line item had come down some (because the fulfillment centers are closer to the customers). One question about this was could we then expect to see improvement in operating expenses going forward; another question noted that many of the new fulfillment centers were in geographies where they now had to collect sales taxes, and did the improvement in delivery expenses offset any negative impact from the sales tax collections? In both cases Amazon side-stepped the issue, and instead highlighted the wider selection and deeper inventory levels that the 20 new fulfillment centers represented.
In past calls Amazon had always given guidance as to future fulfillment center plans. There was no such guidance this time around. In response to a question: did this mean that Amazon had turned the corner on fulfillment build out? Amazon responded: stay tuned — I wonder if the uncertainty might have something to do with the Kiva systems robotics acquisition, and how that might start to impact on existing fulfillment center productivity and staffing levels?
One question about whether international growth was impacted in any way by stickiness in specific geographies? Amazon said yes there was some and specifically mentioned China.
Lastly, while operating profit was positive ($490 million sticks in my mind?), it was impacted by a one time charge to buy their Seattle headquarters (I think the charge was $1.4 billion?).
So a mildly positive and somewhat different report from the past few quarters. The stock was up smartly in after hours trading.
About the stock price I was listening to a podcast about NetFlix’s earnings which were way beyond the street’s expectations and how there was an almost 50% 1-day jump in its stock price. It was pointed out that its P/E ratio was over 500 and that this was outrageously high. It was mentioned that solid tech stocks like IBM, Apple, Microsoft, Google all had P/E’s in the range of 10-25. Then some wag pointed out that Netflix was a piker: Amazon’s P/E is over 3200!
P/E is not thought these days (not since the 1960′s at least) to be much of a predictor of future earnings or stock price performance. I do think it gives one some insight into the instantaneous psychological feelings on the street — and in the case of Amazon might I say its “irrational exuberance” (with apologies to Alan Greenspan
).