Amazon Continues Growing, But Less Than Analysts Guessed; Income Rises At Bertelsmann

Amazon reported fourth quarter sales after the close of the market on Thursday, with sales of $25.6 billion (up 20 percent) and net income of $239 million, or 51 cents a share. (That's a profit margin of less than 1 percent.) Analysts were expecting slightly higher sales and considerably better earnings, so the stock is down about 9 percent -- or roughly $35 a share -- in morning trading so far. Before you get carried away, however, note that the stock was up $19 a share yesterday ahead of the earnings. And even at today's lower levels, shares are still 37 percent ahead of where they were a year ago.

North American media sales, the sprawling category that includes books and ebooks, were $3.5 billion in the quarter, up 21 percent, while international media sales were up only 1 percent at $3.7 billion. For the full year, NA media of $10.8 billion rose 18 percent, and international media was up 1 percent at $10.9 billion. Amazon's media category includes a wide range of physical and digital product. 

In the investor conference call, CFO Thomas Szkutak suggested that international sales growth is lagging because of a slower conversion to digital goods (as well as foreign exchange effects): "As we've been talking about for quite some time, there's certainly a shift going from physical to digital and you see that reflected in our North America media growth rates, the reason why you don't see it as much in our international because we're in the very early stages of that."

Beyond that, as usual, there were very few clues about the Kindle device or content businesses, but we don't see a basis for forming any new conclusions from that, since it's consistent with their reporting behavior. It was a year ago that the company declared "ebooks is a multi-billion dollar category," saying it had grown 70 percent in 2012, while physical book sales had grown 5 percent that year. About a month ago after Christmas, Amazon made the non-specific declaration that "millions of customers unwrapped Kindle e-readers and Kindle Fire tablets this holiday season."

Companywide, Amazon had 2013 sales of $74.45 billion, up 22 percent, with net income of just $274 million, or 59 cents a share. The forecast for the coming quarter was subdued by Amazon's standards as well: They expect sales to rise 13 percent to 24 percent (between $18.2 billion and $19.9 billion), and are looking for anything from a $200 million loss to a $200 million gain.

Separately, Bertelsmann released preliminary topline results for 2013, with full figures to be released on March 26. The company says sales of €16.4 billion were up "about 2 percent" and operating EBIT about level with last year's €1.7 billion. Net income is "expected to exceed €800 million, putting it well above the adjusted prior-year value of €612 million."