Amazon’s Impressive Trajectory

In a season where so many companies are reporting disappointing results, Amazon managed to surpass the Street’s expectations in their recently announced Q4 results. And this week, it has launched the new Kindle, part of an effort to scale the long-stalling e-Books reader market, after kicking it open during the holiday season in November 2007. I really enjoy the way Jeff Bezos does things!

The $27.2 billion giant reported revenues of $6.7 billion, representing 18% growth over the year. The market was expecting revenues of $6.4 billion. EPS for the quarter came in at $0.52, significantly higher than the Street’s expectations of $0.39 and representing annual growth of 10%.

By segment, Media revenues increased to $3.64 billion, up 9%, and Electronics and Other General Merchandise revenues increased 31% to $2.89 billion. By region, North America revenues grew 18% to contribute 48% of revenue. International revenues grew 19%.

Amazon’s active customer accounts grew 16% to more than 88 million while the number of worldwide active seller accounts grew 18% to more than 1.5 million. Seller units were 27% of total units, versus 26% for the previous year.

For the year, revenues grew 29% to $19.2 billion with North America revenues growing 26% to $10.23 billion. International revenues grew 33% to $8.94 billion. Yearly EPS grew 35% to $1.52. Wow!

Amazon is expecting revenues of $4.53-$4.93 billion for Q1 with GAAP operating income in the range of $0.13-$0.21 billion, or between 37% decline and 6% growth.

The recession hasn’t slowed down the drive for growth. Kindle continues to expand and now boasts of the largest collection of e-books. They added 45,000 titles in the quarter to a record 230,000 total titles. They have 103 of the current 112 New York Times Bestsellers, and most new releases are priced at $9.99 or less. They expanded the Kindle Store to include the Arizona Republic, Baltimore Sun, Orange County Register and USA Today and now offer newspapers from eight metro areas in the United States.

They maintained their silence on the number of Kindles sold and on the segment’s financials. But given their recently announced launch of the new Kindle, it can be estimated to be performing quite well. Analysts expect about 4% of revenues to be generated from Kindle sales.

Amazon’s user experience, personalized recommendations, innovative approach to the industry and solid business model make it one of the most promising internet companies that have the potential for long-term sustainability. Besides, it has shown an interest in trying to innovate on many fronts.

The stock fell 2.4% after the announcement of the results and is currently trading at $64.35.