Amazon Makes A Profit…Sort Of
Amazon announced their ‘profits’ for the quarter yesterday, and they’re pretty poor, frankly
Selling everything from books and computers to diamonds and lawnmowers, Amazon said net income in the quarter fell to $19 million, or 5 cents per share, from $30 million, or 7 cents per share, a year earlier. Sales rose 24 percent to $2.31 billion.
Analysts, on average, had expected earnings of 3 cents per share on sales of $2.25 billion, based on Reuters Estimates.
Amazon has been seen as focusing on revenue growth at the expense of profits amid intense competition. In the process, it has alienated many investors who wonder when investments in technology and a costly free shipping program will pay off.
I mean, my goodness, if I generated $2.31 billion of revenue and could only squeeze $19 million profit out of it I think I’d need to find a new business model. It reminds me of the old joke we always laugh about when one of our competitors undercuts us to make a sale to one of our clients, and does the business for what we know is in effect a loss: “Oh, they’ll make it up on the volume.”
That ranks up there with “The check is in the mail” and “I’ll respect you in the morning” as phrases that should cause reasonable people to grab their wallets and run for the hills.
But since I’m not a stockholder, who am I to turn down their free shipping offer? So last night I got the three books I’d ordered last week: America Alone by Mark Steyn, Londonistan by Melanie Phillips, and The Politically Incorrect Guide To Islam by Robert Spencer.
Last night I poured myself a nice glass of port and settled in for some enjoyable reading, only to be interupted by daughter who wanted to watch Victoria And Albert…again. So there went the night. It is a good production, though, and I certainly can’t complain when she wants to watch stuff like that. She wanted to watch Seven Samurai last week, and she actually liked it. I love this girl!
Life | tree hugging sister | 
October 25, 2006 6:42 am
Subscribe
What’s a really scary question is what do they consider “enough” market saturation? And then, scarier, is what will happen to raise revenue once they’ve decided they have enough market saturation.
It’ll be interesting to see whether or not they can survive their own schemes.
I once worked at a place like that. In an effort to make and boost their sales numbers, field reps sold (unloaded) at a favorable rate of $1.50/unit, that which cost over $3.25 to produce. That’s when (and where) I learned what a “Turnaround Specialist” really was – it’s not somebody who works to actually turn the company’s dismal direction around.
“Sales are up!”
“Yes, but we lose money on each one…”