Amazon reports lower profit margins


28 Jan 2011

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Amazon’s revenues increased 36pc to $12.95bn (€9.44bn) in the final quarter of 2010, as more e-books for its Kindle e-book reader have been sold in the US than paperback books in the last three months of 2010, the company revealed in its latest financial results.

Amazon announced that in the US it had sold 115 e-book downloads for every 100 paperback books, even excluding its downloads of free books.

"Last July, we announced that Kindle books had passed hardcovers and predicted that Kindle would surpass paperbacks in the second quarter of this year, so this milestone has come even sooner than we expected – and it’s on top of continued growth in paperback sales," said Jeff Bezos, founder and CEO of Amazon.com.

The company’s profit margins were down, however, as it had spent money on discounting, acquisitions and new depots.

Profits climbed 8pc to $416m (€303.5m) but shares in Amazon fell by about 9pc in after-hours trading after the company said it expected earnings to drop in the current quarter as it invested more on technology.

Amazon’s operating margin sunk to 3.7pc from 5pc at the end of 2009 and the company warned it would be between 2.8pc and 3.8pc in the first three months of 2011.