Amazon's streak of Fire ignites shares

Thu Apr 26, 2012 7:56pm EDT
 

By Alistair Barr

(Reuters) - Amazon.com Inc's quarterly results beat Wall Street's most bullish expectations as heavy spending by the world's largest Internet retailer began to pay off through sales of more digital products on its new Kindle Fire tablet.

Amazon shares surged almost 15 percent, increasing the company's market value by more than $10 billion and boosting the stake of Chief Executive Jeff Bezos by almost $2.5 billion.

Analysts cheered first-quarter earnings and revenue which comfortably exceeded their forecasts.

"It's been a couple of years since Amazon beat expectations on both the top and the bottom line," said Colin Sebastian, an analyst at Robert W. Baird & Co. "That's reminiscent of the Amazon from three or four years ago."

Amazon is spending in three main areas: fulfillment centers to support online retail; video content and other media businesses; and infrastructure for its cloud computing service.

Among its latest ventures is the Kindle Fire, the tablet that competes with Apple Inc's iPad, that some analysts say the company is selling at breakeven or a small loss.

The Fire is important because it helps Amazon handle the shift from physical media products, like books, DVDs, video games and CDs, to digital versions of such content.

During the first quarter, nine out of 10 of the top selling products on Amazon.com were digital products, including Kindle e-books, movies, music and apps, the company noted.   Continued...

 
A box from Amazon.com is pictured on the porch of a house in Golden, Colorado July 23, 2008. REUTERS/Rick Wilking