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Amazon's net income falls 35% to $130 million in Q1 2012

But Kindle Fire fuels strong revenues

Amazon's net income falls 35% to $130 million in Q1 2012
Just as in the firm's 2011 financial report, Amazon's Q1 2012 earnings manage to couple rising sales with falling profits.

Joining up the dots suggests the company's move to price Kindle Fire aggressively is impacting the company in two ways: it's grabbing Amazon a vital share of a tablet market that, pre Kindle Fire, had only one major player, but it's also driving the firm's profits down.

Up and down

In all, net sales at Amazon rose by 34 percent year on year to $13.18 billion in Q1 2012. That's up from $9.86 during the same period in 2011.

Net income, however, fell by 35 percent to $130 million. That compares to $201 million in Q1 2011.

The company claims if the "unfavourable impact from year-over-year in changes in foreign exchange rates" was taken out of the equation, profits would have actually risen by 34 percent.

Either way, it appears Amazon is playing the long game with Kindle Fire, with the company claiming the tablet remains the best selling product on its website in the US. It's also the most gifted and most wished for item across the retailer's entire range.

Three cheers for Kindle

As a whole, Kindle is now the driving force behind Amazon's business, with Kindle Touch Wi-Fi and Kindle Touch 3G best sellers on Amazon in the UK, France, Germany, Italy and Spain.

"I'm excited to announce that we now have more than 130,000 new, in-copyright books that are exclusive to the Kindle Store - you won't find them anywhere else," said founder and CEO Jeff Bezos.

"Kindle is the bestselling eReader in the world by far, and I assure you we'll keep working hard so that the Kindle Store remains yet another reason to buy a Kindle."

Overall, Amazon's worldwide electronics and other general merchandise sales grew 43 percent to $7.97 billion.

No exact figures were cited, but Amazon also took time to mention the positive impact the introduction of in-app purchases to the firm's Appstore for Android has had on its revenues.

Looking ahead, Amazon expects net sales of between $11.9 billion and $13.3 billion - growing between 20 percnet and 34 percent year on year – in Q2 2012. The company also expects to post somewhere between an operating loss of $260 million, or a profit of $40 million.

[source: MarketWatch]

With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.