Amazon shares at new high after bumper Christmas sales

SHARES in Amazon rose to an all-time high on Tuesday after the world's biggest online retailer unveiled record Christmas takings of $US22 billion ($21 billion).

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