The technology sector (NYSE:XLK) as a whole has been ablaze in 2011’s second fiscal quarter, and is abound with examples of unprecedented corporate profits, such as Apple (NASDAQ:AAPL) reporting its best quarter ever, and Google (NASDAQ:GOOG) topping expectations hugely. Amazon (NASDAQ:AMZN) was the latest major tech player to to jump aboard, reporting results Tuesday afternoon that didn’t wow with Apple-like numbers, but still represented a strong showing for the eCommerce giant, coming in with an earnings mark $0.11 higher than analyst targets. Although net income was down, the company reported some very positive developments, such as rapid growth in overseas markets, “International segment sales, representing the Companys U.K., German, Japanese, French, Chinese and Italian sites, were $4.51 billion, up 51% from second quarter 2010.” Music and video sales were also a bright spot, as its “Worldwide Media sales grew 27% to $3.66 billion.”
The company also won through strong growth in Kindle sales, propelling it above expected revenue marks of $9.35 billion to $9.91 billion. Amazon may have sold 8 million Kindles in the past year, accounting for 5% of total sales not including the number of ebook orders placed through the eReader. eBook sales continue to show their promise as competitors such as Google (NASDAQ:GOOG) jump into the game, while the Kindle retains a strong lead in market share over Barnes and Nobles’ (NYSE:BKS) Nook. It has continued to be one of the company’s highest growth areas at a time when Amazon is heavily concerned with reinvesting income to grow the business.
Analysts Fred Moran of Benchmark commented on Amazon’s earnings, “Spending continues at a fairly aggressive pace and the guidance for third-quarter operating income and earnings looked a bit below what we were expecting…It’s not really a surprise to Wall Street because Amazon’s management has been forthright that they would be reinvesting heavily in the business for an extended period of time.”
Amazon remains well positioned to serve as a leader in an eCommerce revolution that is already underway. Over the past several years, shoppers have increasingly eschewed traditional retail and wholesale stores such as Target (NYSE:TGT) and Walmart (NYSE:WMT), finding comparable deals and more choices while perusing outlets on the web. eCommerce transactions grew by 12.6% in 2010, representing a total US market of $176.2 billion, while that number is expected to broach $300 billion by 2015. JP Morgan (NYSE:JPM) analysts recently upped their expectations for eCommerce growth this year, predicting it would hit a clip of 19.6% worldwide, at a total market of $670 billion, which could easily reach $1 trillion by 2014.
Perhaps its position at the forefront of a brimming eCommerce market is the reason Amazon (NASDAQ:AMZN) continues to so vigorously challenge new state laws that exact a tax on web-based sales. The company recently cut ties with over 10,000 affiliates in the state of California (to avoid the sales tax) as it challenges the constitutionality of the law in the court system. Even more evidence the company has really set its gaze forward, yesterday we reported that Amazon will launch its web stores in India next year.