Amazon Reports Significant Earnings Increase (But Mum On Kindle Sales)

Thanks to increased consumer spending, Amazon late Thursday posted a significant increase in first-quarter profit. Net sales increased 46% to $7.13 billion in the first quarter, compared with $4.89 billion in first quarter of 2009. Excluding the $185 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, Amazon said net sales would have grown 42% compared with first-quarter 2009.

In the broadly defined area of electronics and general merchandise, sales were up 72%, which bodes very well for a company known primarily as a seller of books and music.

Operating income increased 62% to $394 million in the first quarter, compared with $244 million in first-quarter 2009. Excluding the $15 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, the company said operating income would have grown 56% compared with first-quarter 2009.

Overall, analysts see prospects improving for etailers of all shapes and sizes. In a research note, Janney Montgomery Scott analyst Shawn Milne said he was maintaining a positive view on the E-commerce sector, with an improved growth outlook of 5% to 10% for 2010.

Net income at Amazon increased 68% to $299 million in the first quarter, or $0.66 per diluted share, compared with net income of $177 million, or $0.41 per diluted share, in first-quarter 2009.

Operating cash flow was $2.78 billion for the trailing twelve months, compared with $1.76 billion for the trailing twelve months ending March 31. Meanwhile, free cash flow increased 62% to $2.32 billion for the trailing twelve months, compared with $1.43 billion for the trailing twelve months ending March 31.

The company again declined to reveal sales numbers for its Kindle e-reader.

Amazon said its Kindle Store now has more than 500,000 books, over 9,000 blogs, and more than 175 top U.S. and international newspapers and magazines, including The New York Times, and The Economist.

For the second quarter, Amazon expects net sales are expected to be between $6.1 billion and $6.7 billion, or to grow between 31% and 44% compared with the second quarter of 2009.

Operating income is expected to be between $220 million and $320 million, or to grow between 39% and 102% compared with second-quarter 2009.

Janney Montgomery Scott's Milne said he expected Amazon to continue to post market share gains despite increased competition, based on an improved pricing and shipping strategy and an expanded merchandise selection.

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