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Kindle investment sees Amazon income fall 58%

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US based e-tail giant Amazon.com has posted healthy sales growth for its fourth quarter trading period today, but its incomes across the whole year have been dented by product investment.

Net sales for the three months ending December 31st 2011 rose 35 per cent for the online trader meaning its full-year sales were up 41 per cent year-on-year to $48.08 billion (£30.5 billion).

Much of boost in revenues is thanks to the continuing popularity of the group’s series of Kindle e-readers and in particular the huge sales for the new Kindle Fire device which in the space of 17 weeks has become the e-tailer’s top selling product.

A huge increase in investment in product inventories, especially the Kindle Fire, has led to a significant drop in net income at the business however: down 58 per cent in the quarter and 45 per cent in the full-year to $631 million.

Jeff Bezos, founder and CEO of Amazon, said: “We are grateful to the millions of customers who purchased the Kindle Fire and Kindle e-reader devices this holiday season, making Kindle our bestselling product across both the US and Europe.

“Our millions of third-party sellers had a tremendous holiday season with 65 per cent unit growth and now represent 36 per cent of total units sold.”

Bridging the gap between e-readers and tablet devices, the Kindle Fire represents an opportunity for Amazon to steal some of the iPad’s market share and the company has invested a lot of money in both development and production in order to keeping its selling price low.

Although the new products is not available outside of the US at present, sales across the multi-product retailer’s international websites also showed strong growth during the fourth quarter.

Its international segment, which includes its UK, German, Japanese, French, Chinese, Italian, and Spanish operations, saw revenues rise 31 per cent to $7.53 billion during the period although once favourable exchange rates are excluded the growth was only 29 per cent.

For the full year Amazon expects to report between a 162 per cent and 69 per cent drop in operating income, a range of -$200 million to +$100 million.

Published on Wednesday 01 February by Editorial Assistant

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