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Amazon Mum on LoveFilm Deal, Net Sales Up 36%

27 Jan, 2011 By: Chris Tribbey

Thomas Szkutak, Amazon SVP and CFO, said during a call with investors everyone would have to “stay tuned” to see how Amazon leverages its recent acquisition of LoveFilm International, the United Kingdom-based online disc rental and streaming service.

Analysts have speculated the acquisition stems from Amazon’s desire to compete with Netflix, and that the company could use LoveFilm to offer a broader digital movie offering in Europe, or even integrate its iVOD rental movie service with a subscription for older, catalog content.

“We think it’s a very exciting opportunity and we’re very pleased to be offering consumers in the media space in Europe this,” Szkutak said.

While discussing his company’s earnings earlier in the week, Netflix CEO Reed Hastings said he was “not quite sure what to make of [the LoveFilm acquisition].”

“Obviously, Amazon was in DVD rental before, sold that interest to LoveFilm and then bought back the whole company,” Hastings said. “And I think we're just going to have to take a couple quarters and see what they plan to do with it. And in the meantime, it doesn't directly affect our plan. There's vigorous competition in all these markets. So we're full speed ahead on our plans.”

Amazon increased its sales 36% year over year to $12.95 billion in the fourth quarter of 2010, the first $10 billion-plus quarter ever for the Internet retailer.

Amazon’s net earnings for the three-month period (ended Dec. 31) were $416 million, up 8% from the $384 million the company earned during the same quarter in 2009.

For all of 2010, Amazon’s net sales rose 40% to $34.2 billion, compared to $24.5 billion in 2009. Full-year net earnings rose 28% to $1.15 billion.

For the fourth quarter, North American sales for Amazon were up 45% to $7.21 billion, worldwide media sales grew 12% to $5.23 billion, and worldwide electronics and general merchandise sales grew 60% to $7.39 billion.

For the first quarter of 2011, Amazon is expecting sales between $9.1 billion and $9.9 billion.

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