Amazon.com announced second quarter earnings and their primary goal of increasing cash flow was realized. Free cash flow topped $486 million, up 37%. Amazon, the world largest online retailer has been fighting to maintain its grip in the wake of many retailers heading to the Internet.
Amazon’s North American sales grew substantially, up 21% from a year ago at $960 million and operating income grew 9% from last year to $72 million from $66 million. Other North American revenue doubles to $50 million.
One of the big keys was the membership club. Member join for $79 a year and then get unlimited two-day free shipping. Regular customers realize a tremendous amount of savings and Amazon gets the annual payments.
“Amazon Prime members love getting unlimited two-day shipping for free with no minimum order size,” said Jeff Bezos, founder and CEO of Amazon.com. “Though expensive for the company, Amazon Prime creates a premium experience for customers who join, and as a result we hope they’ll purchase more from us in the long term.”
CFO Thomas Szkutak told reporters increasing sales by other merchants and higher revenues from a credit card and web services helped margins.
For the full year 2005, Amazon predicts nets sales to be between $8.275 billion and $8.675 billion growing between 20% and 25% over the previous year. They expect operating income to be between $415 million and $515 million or between a (6%) decline and 17% increase compared to last year.
Amazon.com was founded back in 1995 by Jeff Bezos and is based out of Seattle and they sell a tremendous amount of stuff claiming to offer “Earth’s Biggest Selection..”
John Stith is a staff writer for murdok covering technology and business.
