Amazon.com announced its third-quarter earnings on Wednesday, and tried to manage expectations for the fourth quarter. The Seattle Times wrote that Wall Street seemed to react more to Amazon's outlook than to its actual results. That's because Amazon.com's third-quarter 2008 sales were up 31% year-over-year and profits were up 48%. But the company lowered guidance for the fourth quarter, predicting net sales between $6 - $7 billion (growth of between 6% - 23% compared with fourth quarter 2007).
While the third quarter was strong, the company said it experienced "slower rates of growth towards the end of the third quarter, coinciding with disruptions in the global financial markets." Amazon.com's CFO Thomas Szkutak said the company saw a deceleration of growth in purchase items over $1,000. But he seemed anything but glum during a conference call with analysts:
And you know, we think we are relatively well-positioned. We've been working very hard for years on making sure that we have a great experience with customers. We are trying to make Q4 even better than last year. We think we are well-positioned to do that. We have added a lot of selection and we have worked very hard at pricing. We have not only our free shipping offers around the world but certainly Prime has grown a lot since last Q4, so we are very optimistic from a customer experience standpoint and we will have to see where that ends up from a revenue perspective and that's why we are giving the wide range that we have given today.
While eBay and Yahoo are laying off 10 percent of their respective workforce, Amazon added 2,100 new employees in the third quarter. Amazon.com said a very high percentage of those were in operations and customer service as it prepares for the fourth quarter, and to staff three new fulfillment centers.
Amazon said active customer accounts exceeded 84 million, up 17%. Worldwide active seller accounts were more than 1.4 million, up 17%. Seller units were 31% of total units, unchanged from the prior year.
Amazon.com shipped over 1 million units in third quarter 2008 on behalf of sellers who utilized Fulfillment by Amazon.
As for its online payments business, CEO Jeff Bezos said:
Basically we have a couple of services today, external payment services. One call the flexible payment service, checkout by Amazon, simple pay. Those are the three primary ones. And these things are new offerings. The flexible payment service is designed for software developers to be able to design and build their own payment services, or to deeply integrate payments into whatever application they happen to be building and it has a sophisticated and a very well thought through set of APIs that enable great flexibility.
Checkout by Amazon and Simple Pay are for merchants on third-party websites to be able to incorporate Amazon payments into their websites so that their customers can use their Amazon credentials when checking out. These are new seeds that we've planted and the question was what kind of time line might those businesses become meaningful, and that's very difficult to say. We would keep working at those businesses and hope that over time, they would become meaningful.
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Amazon.com announced its third-quarter earnings on Wednesday, and tried to manage expectations for the fourth quarter. The Seattle Times 