Apple (Nasdaq: AAPL) threw down the gauntlet to Amazon.com (Nasdaq: AMZN) with its splashy introduction Wednesday of the iPad. Amazon’s response on Thursday: Game on.
Amazon.com joined a parade of rather upbeat earnings reports from Nasdaq 100 stalwarts, saying fourth-quarter sales jumped 42% to $9.52 million from $6.70 billion in the fourth quarter of 2008.
Earnings for the quarter surged 71% to $384 million, or $0.85 per share, compared with net income of $225 million, or $0.52 per share, in the same quarter a year earlier.
And Amazon was quick on the draw with plenty of Kindle data. Just don’t ask them for the exact number of Kindles sold.
“Millions of people now own Kindles,” said Amazon CEO Jeff Bezos.
And Kindle owners read, a lot. When we have both editions, we sell six Kindle books for every 10 physical books. This is year-to-date and includes only paid books – free Kindle books would make the number even higher. It’s been an exciting 27 months.
Bezos didn’t participate in the company’s conference call, but CFO Tom Szkutak did not elaborate on Kindle sales when pressed.
For the full year, net sales increased 28% to $24.51 billion from $19.17 billion in 2008. Net income rose 40% to $902 million, or $2.04 per share, compared with $645 million, or $1.49 per share, in 2008.
The company also beat estimates with its first-quarter forecast, which calls for sales of $6.45 billion to $7 billion, up 32%-43% from the first quarter of 2009.
Amazon said the Kindle and Kindle DX are currently shipped to more than 100 countries. The company said the Kindle store now has more than 410,000 books, including 100 of 112 New York Times bestsellers, as well as 8,000-plus blogs, and more than 130 major U.S. and international newspapers and magazines, including The New York Times, The Wall Street Journal, Newsweek, and Time.
North America sales rose 36% to $4.96 billion in the fourth quarter, while international sales increased 49% to $4.56 billion. Zappos.com, which Amazon finished acquiring in November, added about $200 million in sales for the quarter. Investors piled into the stock. After breaking below $119 and falling to a 2½-month low Monday, the stock rose Wednesday and Thursday on better than average volume and was up more than 3% in early action Friday.
Apple CEO Steve Jobs fired the first salvo in the looming iPad-Kindle battle Wednesday, pointing out Amazon’s first-mover edge but then saying, “We’re going to stand on their shoulders and go a little further.”
And while plenty of pundits were quick to dig Kindle’s grave, others rose to its defense, pointing to its longer battery life, lighter weight, lower cost, established content lineup and easy-on-the-eyes electronic ink display, according to David Sarno and Alex Pham of the Los Angeles Times.
Former Amazon executive Scott Jacobson, now a partner in a Seattle-based venture capital firm, also weighed in. A shareholder in both Apple and Amazon, Jacobson blogged five reasons why the iPad is not a “Kindle killer.” His bottom line: The Kindle “is really good at what it does, and it doesn’t need to do a whole lot more.”
Jacobson also said Amazon is better at recommending books than Apple’s iTunes is at recommending music (“its music recommendations still suck.”)
Most importantly, said Jacobson,
Amazon can’t afford to lose. … Amazon is in this fight for the long-run, and as Jeff (Bezos) is known to say, ‘it’s still day one’. While I’m sure it’s no surprise to Amazon that Apple is entering the e-book market, rest assured Amazon is now doubling down on its investment.
Apple is going to be a major player in the e-book market. …But iPad is not the death knell for Kindle. It is a shot across the bow. And Amazon needs to step up its game. The nice thing about competition is that it fosters innovation. And we the consumers will be the beneficiaries.
If Amazon can’t beat Apple at its own game, its backup plan is to join them. The Kindle app for the iPhone is the top e-reader app in the iPhone store, according to Staci D. Kramer of paidContent.org. The Kindle will also have an iPad app and can be read on laptops and other devices.
Disclosure: Apple is a holding in the New Economy Leaders Portfolio of The Coolcat Technology Plus Report. The author has no position in any of the companies mentioned.