[LINK] amazon, the economy and the cost of those gadgets
jwhit at janwhitaker.com
Sat Apr 25 09:52:34 EST 2009
I thought I'd pass this along because of the gadgets part.
From Publishers Lunch daily email, so I can't give you a link for my
source, just the embedded one at the end.
>Amazon Continues Growth, But Media Sales Lag
>Overall sales for the first quarter at Amazon.com increased by 18
>percent to $4.89 billion, as operating income increased 23 percent
>to $244 million in the first quarter, and net income rose 24 percent
>to $177 million.
>But the growth was driven heavily by electronics, as the media
>segment--which includes books and digital downloads among other
>items--continues to lag the company's overall performance. North
>American media sales of $1.305 billion were up 8 percent compared to
>a year ago (similar to the rise in the previous quarter), while
>international media sales of $1.418 billion were up just six
>percent, held back by foreign exchange. Take out roughly $35 million
>for the Audible acquisition and "like-for-like" North American media
>growth slides to just 5.4 percent.
>Amazon continues to feed analysts' fantasies by exclaiming, as ceo
>Jeff Bezos wrote recently in a shareholders letter, "that Kindle
>sales have exceeded our most optimistic expectations." Be that as it
>may, either Kindle still isn't translating to significant dollars
>for the company, or its addition is masking even more greater
>weakness (and possible declines) within the media segment, or
>possible holding back sales by cannibalizing more expensive print
>products with subsidized Kindle downloads. (Best guesses put
>quarterly sales of Kindle downloads at $20 million to $30 million.
>Device sales revenues are amortized over a two-year period so they
>are not clearly evident in the company's results, and it's also not
>clear whether they are booked as "media," "electronics," or "other.")
>On Wednesday iSuppli put out a
>release saying they had calculated that price of the raw components
>that comprise the Kindle 2 as approximately $185 dollars, with the
>e-ink screen ($60) and wireless communication module ($40) the two
>most expensive parts. In a rare comment, cfo Thomas Szkutak insisted
>in a conference call including a
>reporter that "the production cost was significantly higher than
>that." And that does not include allowances for wireless
>communication costs, packaging, freight, customer service,
>technology/development, advertising/promotion and many other costs
>(never mind the opportunity cost of the prominent site home page
>space given to Kindle over any other product offering, and the small
>loss per unit takes on new and bestselling Kindle books sold below
>actual publisher wholesale cost).
>For comparison, the AP says Apple's iPhone 3G costs $174 to build
>and lists for $599 to $699 without a service contract. (Amazon's
>gross margin across North American sales was 26.9 percent.)
Melbourne, Victoria, Australia
jwhit at janwhitaker.com
Our truest response to the irrationality of the world is to paint or
sing or write, for only in such response do we find truth.
~Madeline L'Engle, writer
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