Amazon shares at new high after bumper Christmas sales
The business that began trading as a bookstore and now stocks everything from cameras to nappies increased worldwide sales by 22 per cent in the fourth quarter.
Amazon continued to grab market share from high street retailers and online rivals, helping to swell its cash pile to $US12.4 billion. Profits were boosted by a major investment in 20 new distribution centres.
"The growth rate shows not only are they taking share from bricks and mortar but also other online channels," said RJ Hottovy, an analyst at research firm Morningstar. "You are seeing a consolidation of where people are going to for digital content. Apple's iTunes and Amazon are the stand-out destinations."
Amazon's selection of films, TV shows, songs, books, apps and games has grown to 23 million titles.
Amazon shares jumped 11 per cent to $US288 in after-hours trading, capping a year in which their value has risen 50 per cent. The company said operating income jumped 56 per cent to $US405 million in the fourth quarter.
The founder and chief executive, Jeff Bezos, said book sales had reached a tipping point, with ebooks beginning to take over from printed volumes. "We're now seeing the transition we've been expecting," Mr Bezos said. "After five years, ebooks is a multibillion-dollar category for us and growing fast - up approximately 70 per cent on last year. In contrast, our physical book sales experienced the lowest December growth in our 17 years as a bookseller."
The fastest-growing area, still small at $US820 million, includes services such as web hosting, with Amazon renting out servers for businesses to store their data.
Amazon is the only company "that is able to leverage a global fulfilment network to drive disruption of traditional offline retail sales", a Morgan Stanley analyst, Scott Devitt, said. He forecasts the global e-commerce market will reach $US1 trillion by 2016, from $US512 billion last year. By then, Amazon's market share will be 23.5 per cent, pushing total sales to $US166 billion.
Guardian News & Media
Frequently Asked Questions about this Article…
Amazon shares rose to a record after the company reported record Christmas takings of $US22 billion and 22% worldwide sales growth in the fourth quarter. The results included a 56% jump in operating income to $US405 million and a stronger cash position, which helped lift the share price (an 11% after-hours jump to $US288) and capped a year in which the stock rose about 50%.
Amazon reported record Christmas takings of $US22 billion, contributing to a 22% increase in worldwide sales in the fourth quarter. That level of holiday sales was a key factor in the company’s strong quarterly performance.
In the fourth quarter Amazon said operating income jumped 56% to $US405 million. The company also reported strong sales growth and improvements that drove overall profitability for the period.
Amazon’s cash pile grew to $US12.4 billion, according to the results reported alongside the strong holiday sales figures.
The company made a major investment in 20 new distribution centres, and the report noted that profits were boosted by this expansion of its fulfilment network.
Ebooks and web services were singled out in the report: ebooks grew about 70% year‑on‑year and have become a multibillion-dollar category for Amazon, while the fastest-growing area overall (though still relatively small at $US820 million) includes services such as web hosting where Amazon rents servers to businesses.
Analysts in the article noted Amazon is taking share from bricks-and-mortar retailers and other online channels. Morgan Stanley analyst Scott Devitt forecasted the global e-commerce market could reach $US1 trillion by 2016 (up from $US512 billion), with Amazon capturing about 23.5% of that market and pushing sales to roughly $US166 billion.
The key takeaways are strong holiday sales ($US22 billion), robust fourth-quarter growth (22%), rising operating income (up 56% to $US405 million), a healthy cash balance ($US12.4 billion), and fast growth in digital content (ebooks) and web services. These factors helped lift the share price, but investors should view these facts as company performance indicators rather than personal investment advice.
Call 1300 880 160
Start a chat
Schedule a call
