Booming sales of e-book readers and material to read on them brought early holiday cheer to online retailer Amazon.com in the third quarter. And judging from the company’s better-than-expected forecast for the current quarter, robust sales will continue through yearend at Seattle-based Amazon.
On Oct. 22, Amazon said third-quarter net income surged 68 percent, to $199 million, while revenue jumped 28 percent, to $5.45 billion, compared with Wall Street’s estimate of $5 billion. “This looks like holiday-season performance and they’re doing it in the third quarter,” says Jeff Lindsay, analyst with Sanford C. Bernstein. For the quarter that ends in December, Amazon forecast sales of $8.1 billion to $9.1 billion, compared with $8.19 billion expected by analysts surveyed by Bloomberg News.
The performance and forecast reflect growing demand for the Kindle electronic book reader, which now sells more units and contributes more revenue than any other product on the site, Amazon said. The company doesn’t release individual sales numbers for the device, but Citigroup analyst Mark Mahaney estimates that it will sell 1.5 million, worth $700 million. An international edition of the reader went on sale the same day Amazon announced its third-quarter results.
Investors Shrug Off Fears
An after-hours surge in the stock also suggested that investors are shrugging off concerns by some analysts that Amazon may be overvalued compared with eBay, another e-commerce company. In after-hours trading, Amazon shares surged 16.7 percent, to 107.03. During regular trading, before the results were released, the stock barely budged, rising 3 percent, to 93.45.
On Oct. 21, eBay gave investors a relatively gloomy outlook for the holidays when it forecast fourth-quarter earnings of 38 percent to 40 percent a share, compared with 40 percent expected by analysts. The company also forecast sales of $2.2 billion to $2.3 billion, while analysts had expected $2.26 billion.
Customers of Amazon…