Amazon Posts a Healthy Profit

Amazon the online retailer, has posted a healthy third-quarter profit with a 16% rise over the same period a year ago. Sales have been bolstered by its Kindle e-book reader.

As a bellwether for the online retail industry and heading towards the all-important holiday shopping season many eyes were on the e-commerce giant as it reported a net profit of $231m, up from $199m in the same period last year.

Revenues were up 39% at $7.56 billion but Amazon said that its total operating expenses were up more than 40% at $7.29 billion. This was enough to give its share price a drubbing which was down by 13% in extended trading.

Amazon’s largest sales category, electronics, which includes Kindle was up by 68% to $3.97 billion. Kindle was introduced in the US in 2007. Since going on sale in other countries around the world it has become Amazon’s fastest selling and best-selling item of all time.

Looking ahead, Amazon projected sales for the final quarter which includes the busy holiday period to be between $12 billion and $13.3 billion which would see growth of up to 40%.

The Kindle remains the chief focus of Amazon as it continues to expand its range of new features and publishing partners. On the same day that its figures were released Amazon announced that it had reached an exclusive deal with publishing house Wylie to release digital versions of 20 works of modern literature including “Lolita” and “Fear and Loathing in Las Vegas.”

Without releasing sales figures Amazon has said that they are now selling more digital books than printed books. But as the e-book reader industry is being revived by the Kindle other dedicated reading devices from rivals will be increasing competition as well as the competition from tablet computers such as Apple’s iPad. As a response Amazon have dropped the price of the Kindle to $189 from $259.