Amazon.com’s fourth-quarter financial report on Tuesday afternoon will show how the company performed in the critical holiday shopping season and shed new light on the reception for Amazon’s revamped Kindle lineup and new Kindle Fire tablet.
This much is clear: Sales are expected to soar compared with the same period a year ago, with analysts polled by Thomson Reuters expecting net sales to rise by 41 percent, to $18.2 billion. That’s near the top of the range that Amazon provided in its previous guidance for the quarter.
But the wild card is the company’s profits. Amazon has been spending considerable sums to increase the capacity of its business — building new distribution centers, investing in Amazon Web Services infrastructure and adding new employees across the company at a record pace. All of that spending has resulted in profits that have disappointed Wall Street in recent quarters.
Increasing the uncertainty this time around is the expansion of the Kindle business, and Amazon’s strategy of offering the Kindle Fire for $199, at or below its own cost.
The company hopes to make the difference through sales of movies, books, Amazon Prime subscriptions and other products to Kindle Fire users — but that could take some time to kick in, and the company’s bottom line could feel the effects in the meantime.
Amazon’s previous guidance for the fourth quarter represented a huge range, projecting anything from a $200 million operating loss to a $250 million operating profit. Analysts are expecting earnings per share of 19 cents, down 79 percent from the fourth quarter a year ago.
The other big question is how much insight Amazon will provide into Kindle Fire sales, and whether we’ll be able to see how they stacked up against Apple’s iPad during the holiday period. The Seattle company said the overall Kindle lineup topped 4 million in unit sales in December, including the Kindle Fire and Kindle e-readers, but Amazon traditionally provides as few specifics as it can about the Kindle results.
Apple last week said iPad sales more than doubled in the fourth quarter, to more than 15 million units.
Check back with GeekWire on Tuesday afternoon for details and analysis of Amazon’s earnings report.