Amazon’s 2011 Q1: sales up 38%

Amazon’s 2011 Q1: sales up 38%

Amazon reported its 2011 first quarter financial results today.

This

Press Release

has some of the details.

You aren’t going to see how many Kindles were sold…and Kindle sales aren’t supposedly a big part of their business.

There are a lot of financial data here…I’m not an expert on that.  It appears to me that sales were up, but free cash flow is down.  What does that mean?  Stockholders don’t get as much.

Again, not an expert…but I think we may see the stock drop on this.

The Q & A on the conference call, which you can hear recorded here:

http://www.amazon.com/ir

is often the most interesting part.

The first question had to do with the impact of the events in Japan, and a note that shipping costs are a growing negative.  That may be due to Prime adoption (which increases free shipping).

2. Are international markets adopting Prime?  Is Kindle international growth following the US pattern?  A. People love Prime.  “Tremendous growth” “Very, very happy”.  KSOs (Kindle with Special Offers) will start shipping tomorrow (April 27).

3. Unit growth seems very high.  What about an outage on Amazon services that had happened?

4. Included a question about the state tax issue.  If you’d had to collect sales tax all long, how would that have hurt you?.  A.  They already collect sales tax on 50% of their revenue base…

Financial questions followed…

How will the change in distribution in books affect the margin at Amazon?  “long term perspective” “incredibly excited…with Kindle”  “customers are buying a lot more books”

There was a question about the “Living Social” promo…it seems as though customer acquisition costs might be rising…

When a customer becomes a “digital customer”, how does that affect their spending with Amazon?  A. Digital customers are also good physical customers. 

Those are just my very rough notes.  🙂

If you listened to the call (or just read the press release), feel free to let me know what you think.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

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11 Responses to “Amazon’s 2011 Q1: sales up 38%”

  1. Edward Boyhan Says:

    As you postulated, Wall Street is not too happy.

    For the last three quarters revenue growth has been up (though the revenue growth rate trend is declining a bit quarter over quarter). The real issue is that operating expenses are rising faster than revenues. This in turn is due in part to the extremely rapid growth in non media physical products which requires manual fulfillment (teleportation research not having proceeded as rapidly as we might have wished :-)).

    In 2010 Amazon increased fulfillment centers by 33%. Today, Amazon said they are currently adding an additional 9 centers in 2011, and that if revenue growth continues, they probably will have to increase that number (this is in line with the help wanted press releases — that you blogged about a day or so ago).

    Another interesting fact is that media has fallen to under 40% of consolidated revenues. Media includes books, video, and music — so books are probably only a 25% part of total revenues. Every year that goes by Amazon is less and less a book seller.

    Fastest growth is in the Amazon Web Services segment — I wonder if that will continue given the extended AWS outages they’ve been dealing with for the last week or so.

    Forward guidance says to expect continued growth in operating expenses, and a potentially even greater % decline in net income. In addition to fulfillment (80% of operating expenses), Amazon is also investing heavily in new product development.

    Opinion is mixed as to whether all of this is a good thing or not. Wall Street analysts are unhappy; technology analysts like me tend to see this in a more positive light. Physicals fulfillment is a difficult problem — it’s hard to see how they can long term deal with unrelenting growth in physical product sales.

  2. jordanvincent Says:

    Very nice blog. I enjoyed the statistics since I’ve been trying to sell my book. Definitely subscribing to keep updated. Thank you.

    • bufocalvin Says:

      Thanks for writing, jordanvincent!

      Thanks for the kind words! Is the book published, or do you mean you are trying to sell it to a publisher? If the former, what’s the title?

  3. jordanvincent Says:

    Umm… I self published it through kindle. I’m not a writer by any means. I just enjoy writing and I’ve always had a good idea for a book so I just went with it. It’s called Intercepted and I’m working on the sequel now, but it’s hard to get a lot done between work and college. I look at blogs to try to find good books to read that people recommend, and I was very pleased to come across your blog. Very interesting stuff, and since I’m not an econ major, It’s nice to have someone break it down for you!

    • bufocalvin Says:

      Thanks for writing, jordanvincent!

      I think, by some means, you are a writer. 🙂

      One who writes is a writer, and you’ve written. You may not be a professional writer at this point, but that doesn’t mean you don’t write.

      I appreciate the kind words, but I’d never claim to be an economist, just an interested layperson. I’m glad you found it helpful. 🙂

      For those of you who are interested, here is Jordan’s book:

      Intercepted

  4. Here is an interesting blog about amazon… « jordanvincent Says:

    […] https://ilmk.wordpress.com/2011/04/26/amazons-2011-q1-sales-up-38/ Comments RSS feed LikeBe the first to like this post. […]

  5. jordanvincent Says:

    Hey thank you very much! I would like to return the favor by putting a link to your blog on mine. It’s very interesting stuff for anyone involved with kindles- readers and authors. But I can’t thank you enough for helping me out, I appreciate it =)

    • bufocalvin Says:

      Thanks for writing, Jordan!

      Sure, you can link. I linked to your book as a way to make things easier for people who might want to sample it and/or buy it. After that, it’s between you and them. 🙂

  6. Edward Boyhan Says:

    Just one last comment on Q1 results. Yesterday, WSJ put out this article:
    http://www.emailthis.clickability.com/et/emailThis?clickMap=viewThis&etMailToID=1494301250
    about Amazon reducing music prices way below iTunes levels, and (of more relevance to this topic) the stock had closed above 200! For at least the last 3 quarters the pattern has been clear: right after the results are announced the stock drops (for all the reasons mentioned above), and then a week or so later it is up sharply. Over the last year the stock is up about 50% compared with the DJIA up about 15%. I’m not a stock investor, but if I had bought the stock right after 2Q results were announced last June, I would be up almost 90% — not too shabby.

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