I have simply cut and paste the following portion from the Publisher’s Lunch I subscribe to free, via email. I presume you can google “Publisher’s Lunch” and sign right up if you want it too. ( It is interesting to see how many deals are being made per week. When I looked for the alleged existing print version of Publisher’s Lunch at Border’s, I could not find it.) Knowing that most of the people who read our blog are writers, the following may interest you. (I also am trying to keep tabs on the growth of people using ereader devices. However, when I asked a class of students most recently, only one student said he owned a device.):
Amazon Says Kindle Sales Exceed Paperbacks–and Coincidentally, Profits Fall Even As Sales Rise Over $3 Billion
Amazon reported sales of $12.95 billion for the fourth quarter, up 36% from a year ago. But operating income actually declined, even with almost $3.5 billion in extra revenue, down $2 million at $474 million.
The company says they sold “millions of third-generation Kindles” in the quarter, and indicates “Kindle books have now overtaken paperback books as the most popular format on Amazon.com” and “this milestone has come even sooner than we expected – and it’s on top of continued growth in paperback sales.” The company adds that, “since the beginning of the year, for every 100 paperback books Amazon has sold, the company has sold 115 Kindle books.”
Curiously, with all that media growth–booming Kindle sales plus growing paperback and hardcover saves–the company’s overall NA media segment is still not increasing in proportion. NA Media sales for the full year were $6.881 billion, up 15 percent from $5.964 billion a year ago, and in the fourth quarter media sales of $2.37 billion were up less, by 13 percent, compared to a year ago. International media sales also grew at just 11 percent, at $2.865 billion. The data is unclear, but some publishing people will conclude that Kindle sales and books sales are rising due to lower prices and no margin or deficit spending by the company.
In a conference call with investors on Thursday afternoon, multiple analysts tried extracting more information on the metrics of the Kindle business, as well as exploring the theme noted above. Like James Mitchell of Goldman Sachs, asking, “In the media business, if e-book sales are now bigger than paperback sales and paperback sales continue to grow, is there a big obvious reason why total media sales is growing at 13% rather than a slightly faster number?”
CFO Thomas Szkutak kept declining to provide any information. On Kindle, he would only say, “we’re continuing to invest in that business. We think it’s a very good business for us, and we’re excited about the long-term opportunity there…. We think it’s a very efficient capital business, and we think that we certainly like the model that we have and the opportunity that it brings to our shareholders over the long term.”
For the coming quarter, Amazon warned that operating income is expected to fall somewhere between 34 percent and 2 percent. That expectation of declining profits, along with fourth quarter sales that were still a little shy of Wall Street expectations, sent shares down sharply, almost 7.5 percent in this morning’s trading after having risen before the report on Thursday. The company is continue to invest in more warehouses and data centers.