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Amazon delivers a very strong quarter

Oct. 24, 2009

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Amazon's stock rose strongly to an all-time high yesterday as the company produced much better than expected numbers. Amazon reported an almost 70 percent rise in third-quarter profit, led by strong sales of its Kindle e-Reader, of other electronics and general merchandise.

"Amazon held up better than overall e-commerce and retail sites during this recent economic downturn and it appears to be one of the first to be spring-boarding out of it," said Frederick Moran, an analyst who follows the company.

Overall, sales of electronics and other general merchandise, which represent about 43.2 percent of Amazon's revenue mix, rose 50.9 percent in North America and about 48.1 percent on a global basis.

Amazon attracted price-conscious buyers away from online competitors and traditional retailers as the recession forced many households to cut back on expenses. Now that consumer spending appears to be slowly recovering, the rate of growth at Amazon looks pretty good for now.

Amazon yesterday that sales grew about 27.9 percent to $5.46 billion in the 3rd quarter, beating analysts' forecast for an 18 percent growth to a little over $5 billion.

Amazon added that it expects 4th quarter sales to range between $8.1 billion and $9.1 billion, or to grow between 21 percent and up to 36 percent when compared with its fourth quarter last year.

Amazon could well sustain a 25 percent growth rate for 2010, according to some analysts. In the past 12 months, Amazon has uniquely stood out above the retail crowd on average.

Amazon is now considered the leader of the pack when online retailing is concerned, and there's no question that it's setting the tone as to how selling on the Internet should be done.

Source: BKN.

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