Amazon shares soar despite $39m annual loss

 

Gallery

Posted on 30 Jan 2013 at 10:27

Shares in Amazon have hit a record high even though the web retailer posted a net loss of $39 million for 2012.

Amazon generated more than $60 billion of revenue in 2012, a year-on-year increase of 27%. However, the company's continued investment in new technologies - such as its range of Kindle hardware - and new warehouses have pushed the company back into the red.

Nevertheless, better than expected profits for the fourth quarter impressed investors, pushing the company's share price to a new high. Amazon's operating income climbed 56% to $405 million in the fourth quarter, compared with $260 million in the fourth quarter of 2011.

After five years, ebooks is a multi-billion dollar category for us and growing fast - up approximately 70% last year

Amazon CEO Jeff Bezos said some of the long-term bets the company had placed on new technologies - such as ebooks - were beginning to pay off. "We're now seeing the transition we've been expecting," Bezos told analysts.

"After five years, ebooks is a multi-billion dollar category for us and growing fast - up approximately 70% last year. In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5%."

Other initiatives such as video-on-demand are also huge growth areas for Amazon. In the US, customers who sign up for membership of Amazon's Prime delivery service are also given access to streamed movies and television shows from the company.

"The percentage of Prime customers who were watching free content through Prime instant video has gone up dramatically year-over-year," said Amazon's chief financial officer Tom Szkutak. "We've also increased Prime membership dramatically year-over-year. They are also purchasing paid content."

Is Amazon eating itself? Read this month's PC Pro - on sale now - to read our investigation into the company's future.