Despite record holiday sales, Amazon’s Q4 profit fell 50 percent, the company said. Net income was $98 million for the quarter, compared with net income of $199 million in Q405. The company cited higher taxes and increased spending on promotions and discounts during the Christmas shopping season. Other highlights:
—Net sales increased 34 percent to $3.99 billion in 4Q, compared with $2.98 billion for the same period in 2005.
—Operating income increased 20 percent to $197 million in the fourth quarter, compared with $165 million in fourth quarter 2005.
For the full year, net income was $190 million in 2006, down 47 percent from $359 million in 2005. Amazon pointed to income tax expenses increasing $92 million to $187 million in 2006.
Update: During the conference call, Amazon executives noted that a great deal of its investment expenses were devoted to the development of Unbox, its video download service. Executives said the service is performing strongly, though they declined to offer details, apart from saying that it has the highest amount of repeat customers of any Amazon service. “In terms of Unbox, we continue to add selection at Unbox. We’re getting very good repeat customer performance back to our site. So we are very pleased from that perspective. The team is seeing especially strong performance amongst television episodes, as well as hard to find video. As Tom said, of all of our category offerings, it has amongst the highest repeat rates so we’re very encouraged by that.”
Earnings release | Webcast