In a good test of the health of the US consumer, Amazon.com (NSDQ: AMZN) reported Q407 revenue of $5.67 billion, up 42 percent year-on-year from $3.99 billion. Currency effects boosted revenue by $195 million. Net income soared 112 percent to $207 million ($.48/share) from $98 million ($.23/share). Net income matched analyst expectations, while revenue exceeded consensus of $5.37 billion. Some highlights:

—Worldwide media sales grew 33 percent to $3.33 billion, representing a slightly slower rate than last quarter’s growth of 36 percent.

—Amazon Web Services now claims 330,000, up more than 30,000 from the last quarter.

—International sales grew 46 percent, although without currency effects, growth would have been 35 percent.

—For the full year, Amazon is offering guidance of $18.75-$19.75 billion, which at the high end would be growth of 33 percent. Op income for the year, which is always guided widely, is predicted to be $785-$985 million, which represents potential growth of 20-50 percent.

—No data was offered on the company’s young MP3 store. The release does say it has 50,000 independent labels selling through the site (not to mention the big four labels), which is up from 33,000 the last time it was updated.

Release | Webcast | Transcript (via SeekingAlpha)

Conference call: (via transcript) The quarter was obviously another strong one, but margin concerns, which pushed the stock down 12 percent after hours, were a major topic of discussion. The company has benefited from good operating leverage, as its income growth has outstripped its revenue growth, but the latest guidance suggests the two will come closer into alignment. So analysts spent a lot of call prodding on areas such as capex and Amazon Prime to figure how what profitability will look like going forward. On this issues, the company is characteristically unapologetic. CFO Thomas J. Szkutak: “What we’ve said in the past is we think that double-digit operating margins are possible but what we are really focused on is driving free cash flow and free cash flow per share, as you can see that evidence in our 2007 results, total year as well as Q4. And so again, nothing has changed. We’ve also said that we think double-digits is possible but if a high-single-digit operating margin is the right thing to drive free cash flow, that’s what we’ll do.” 

—Kindle: Not surprisingly, the company isn’t giving out much details on its Kindle e-book reader, other than that it’s doing well and that demand is outstripping supply. Bezos: “(The) Kindle is, in terms of demand, is outpacing our expectations, which is certainly something that we are very grateful for. It’s also on the manufacturing side causing us to scramble. We’re working very hard to increase the number of units that we can build and supply per week, so that we can get back—our goal is to get into a situation as quickly as we can where when you order a Kindle, we ship it immediately.”

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