Amazon Q2 Revenue Up, Income Down

With its Q2 earning announcement, Amazon has shown its ability to bring in the dollars even in the face of a tough economy. What it's having a difficult time doing is keeping the cash once it's in.

The company's net sales hit $4.65 billion in the quarter ending June 30, 2009 -- a 14 percent jump over the same period in 2008, and that's not taking into account the $227 million change in exchange rates. Accounting for that, the growth would have been 20 percent. And free cash flow was over $1.5 billion Not too shabby.

But the payment came, perhaps, in how much money Amazon could retain. Even with the revenue growth, operating income was down by 27 percent, year-over-year. Without a hit of $30 million from exchange rates, that would still have been nearly 13 percent down. Although the quarter included the $51 million it cost to rid itself of the Toysrus.com lawsuit, a one-time non-cash gain of $53 million from selling European DVD rental assets more than offset it, so the net result was still lower. Net income was down by 10 percent.

The result may have been from where the company saw its revenue growth. Electronics and other merchandise was up 35 percent worldwide.

Looking over the six months ended in June, year-over-year net revenue growth was even better: around 16.4 percent. But operating income was still down, though by only 3.1 percent. And year-over-year net sales growth was down from 39 percent consolidated worldwide to 16 percent over the first six months.