Amazon’s Q3 sales rise 24% to $2.31 billion, as net income drops 37%
Net sales at Amazon.com Inc. rose 24% to $2.31 billion for the third quarter ended Sept. 30, up from $1.86 billion a year ago, as a continued investment in technology caused net income to drop 36.6% to $19 million, Amazon says.
Amazon’s worldwide sales in electronics and other general merchandise grew 43% year-over-year to $699 million. North American segment sales, representing Amazon’s U.S. and Canadian sites, rose 21% to $1.26 billion, as international segment sales, comprised of Amazon’s sites for the U.K., Germany, Japan, France and China, rose 29% to $1.05 billion. Amazon is No. 1 in the Internet Retailer Top 500 Guide to Retail Web Sites.
Amazon founder and CEO Jeff Bezos says Amazon will continue to invest in new technology and content, and he pointed to particular success with Amazon Prime, the membership service introduced last year that, for a $79 annual fee, offers free 2-day shipping on all orders.
"We`re pleased with the strong revenue growth and rapid adoption of Amazon Prime," he says. "We look forward to seeing significant sequential improvement in operating leverage this Q4, even as we continue to invest in many initiatives including new retail categories, seller platforms, web services, and digital."
In the third quarter, Amazon launched Amazon Unbox, a video on demand download service and announced its Automotive Parts & Accessories store with more than 1 million auto products offered by Amazon as well as by its retail partners. It also launched in beta test mode its WebStore by Amazon and Fulfillment by Amazon, which offer small and medium-sized businesses access to Amazon’s order fulfillment, customer service, shipping and web site technology.
Operating income in Q3 fell 28% year-over-year to $40 million from $55 million, as operating cash flow declined 11% to $587 million for the trailing 12 months, Amazon says. The year-over-year comparisons include a $40 million one-time payment Amazon made in Q3 2005 as part of a patent litigation settlement, it adds.
For all of 2006, Amazon is projecting net sales to grow between 22% and 26% to as much as $10.675 billion.
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