Amazon’s Q3 Sales Jump 28%

Amazon.com, Inc., which acquired Zappos.com in July of this year, said  sales increased 28% in the third quarter to $5.45 billion from $4.26 billion in third quarter 2008. Excluding the $41 million
unfavorable impact from year-over-year changes in foreign exchange
rates throughout the quarter, net sales would have grown 29% compared
with third quarter 2008.

Operating income increased 62% to $251 million in the third quarter,
compared with $154 million in third quarter 2008. Excluding the $10
million unfavorable impact from year-over-year changes in foreign
exchange rates throughout the quarter, operating income would have
grown 69% compared with third quarter 2008.

Net income increased 68% to $199 million in the third quarter, or $0.45
per diluted share, compared with net income of $118 million, or $0.27
per diluted share, in third quarter 2008.

Operating cash flow was $2.25 billion for the trailing twelve months, compared with $1.27 billion for the trailing twelve months ended September 30, 2008. Free cash flow increased 98% to $1.92 billion for the trailing twelve months, compared with $0.97 billion for the trailing twelve months ended September 30, 2008.

Common shares outstanding plus shares underlying stock-based awards outstanding totaled 451 million on September 30, 2009, compared with 448 million a year ago.

“Kindle has become the #1 bestselling item by both unit sales and dollars – not just in our electronics store but across all product categories on Amazon.com. It’s also the most wished for and the most gifted. We are grateful for and energized by this customer response,” said Jeff Bezos, founder and CEO of Amazon.com. “Earlier this week we began shipping the latest generation Kindle. Its 3G wireless works in the U.S. and 100 countries, and we’ve just lowered its price to $259.”

Highlights

    * This week Amazon started shipping Kindle with U.S. & International Wireless and lowered its price to $259 from $279. This newest Kindle is available to ship to customers living outside the U.S. Customers in more than 100 countries around the world, and U.S. customers traveling abroad, can take advantage of Kindle’s 3G wireless technology to download a title in 60 seconds or less.
    * The U.S. Kindle Store now has more than 360,000 books, including 101 of 112 New York Times Bestsellers, more than 7,000 blogs, and more than 90 top U.S. and International newspapers and magazines, including: The New York Times, The Wall Street Journal, The Times (U.K.), Le Monde, The Economist, Newsweek, Time, and Fortune. Kindle owners can also select from over 60,000 audiobooks from Audible.com and listen to them directly on their Kindle.
    * The company announced “Kindle for PC,” the free application for reading Kindle books on the PC. Kindle for PC features Amazon’s Whispersync technology, which automatically saves and synchronizes customers’ bookmarks and last page read across devices, including the Kindle, Kindle DX, iPhone, iPod touch, and PC.
    * North America segment sales, representing the Company’s U.S. and Canadian sites, were $2.84 billion, up 23% from third quarter 2008.
    * International segment sales, representing the Company’s U.K., German, Japanese, French and Chinese sites, were $2.61 billion, up 33% from third quarter 2008. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, International sales grew 35%.
    * Worldwide Media sales grew 17% to $2.93 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter sales grew 18%.
    * Worldwide Electronics & Other General Merchandise sales grew 44% to $2.36 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter sales grew 45%.
    * Amazon.com launched “Local Express Delivery,” a new shipping option giving customers same-day delivery on thousands of items in seven major cities: New York, Philadelphia, Boston, Baltimore, Las Vegas, Seattle and Washington D.C. Amazon Prime members pay just $5.99 per item for the service.
    * The company continues to expand and enhance free shipping offers across the world. Amazon.co.uk began offering free shipping on all products in the U.K., eliminating the prior threshold of £5; while Amazon.co.jp now offers free same-day delivery service to Amazon Prime customers in the Kanto and Kansai regions of Japan.
    * Items shipped on behalf of sellers who utilized Fulfillment by Amazon (FBA) more than tripled from the prior year. Sellers can still join FBA and take advantage of Amazon’s extended delivery promise for the holidays − customers can order items as late as December 23rd and still get them in time for the holidays.
    * Amazon.com expanded its Frustration-Free Packaging program, offering additional items from Fisher-Price, Mattel, Kingston and other leading toy and electronics manufacturers in easy-to-open, environmentally friendly packaging.
    * Amazon Web Services (AWS) launched Amazon Virtual Private Cloud (Amazon VPC), a secure and seamless bridge between a company’s existing IT infrastructure and the AWS cloud, enabling enterprises to connect their existing infrastructure to AWS compute resources.

Financial Guidance

The following forward-looking statements reflect Amazon.com’s expectations as of October 22, 2009. This guidance excludes the impact of Zappos.com, Inc., including approximately $35 million of expenses primarily related to employee compensation costs, amortization of intangibles and merger-related expenses that would be recognized in the fourth quarter 2009 if the transaction closes as planned. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce and the various factors detailed below.

Fourth Quarter 2009 Guidance

    * Net sales are expected to be between $8.125 billion and $9.125 billion, or to grow between 21% and 36% compared with fourth quarter 2008.
    * Operating income is expected to be between $300 million and $425 million, or to grow between 10% and 56% compared with fourth quarter 2008. This guidance includes approximately $100 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions or investments are concluded and that there are no further revisions to stock-based compensation estimates.