01—Abstract
Summary
Summary of the 10-K filed January 30, 2009. Cited figures are marked; the original filing is the authoritative source.
Amazon.com, Inc. reported strong net sales growth of 29% for the fiscal year ended December 31, 2008, reaching $19.17 billiona.
Despite the challenging global economic environment, the company demonstrated resilience, particularly in its International segment which grew 33% and now constitutes 47% of total net sales. Income from operations increased to $842 millionb, reflecting effective cost management and continued investment in technology and content to enhance customer experience and operational efficiency. The company continues to prioritize long-term growth in free cash flow per share, which grew to $1.36 billion in 2008.
Amazon is strategically expanding its diverse offerings, catering to consumer, seller, and developer customers through its e-commerce platforms and Amazon Web Services. While facing intense competition and various risk factors, including economic downturns and evolving regulations, the company maintained a strong liquidity position with $3.7 billionc in cash, cash equivalents, and marketable securities. Key initiatives for 2009 include continued focus on customer-centricity, price reductions, and efficiency improvements across its operations.
02—Key points
Key Highlights
- Net sales grew 29% year-over-year to $19.17 billion in 2008.
- International segment net sales increased 33%, now representing 47% of total net sales.
- Income from operations rose to $842 million, indicating improved profitability.
- Free cash flow increased to $1.36 billion in 2008, demonstrating strong operational cash generation.
- The company maintained a robust liquidity position with $3.7 billion in cash, cash equivalents, and marketable securities.
- Amazon continues to invest in technology and content, essential for long-term growth and customer experience.
- The company repurchased $100 million of its common stock in 2008 under an authorized $1 billion repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Amazon.com Inc kept $0.03.
- Revenue$19.17B100.0%
- Cost of revenue−$14.90B77.7%
- Gross profit$4.27B22.3%
- Operating costs−$3.43B17.9%
- Operating income$842.0M4.4%
- Interest, other & tax−$197.0M1.0%
- Net income$645.0M3.4%
Where FY2008 revenue went
$19.17B- Cost of revenue: $14.90B, 78% of revenue
- Operating costs: $3.43B, 18% of revenue
- Net income: $645.0M, 3.4% of revenue
- Interest, other & tax: $197.0M, 1.0% of revenue
Kept 3.4% as net incomeNet income $645.0M · 3.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed January 30, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $19.17B$14.84B | +29.2% |
| Cost of Revenue | $14.90B$11.48B | +29.7% |
| Gross Profit | $4.27B$3.35B | +27.3% |
| Operating Expenses | $3.43B$2.70B | +27.1% |
| Operating Income | $842.00M$655.00M | +28.5% |
| Interest Expense | $71.00M$77.00M | −7.8% |
| Net Income | $645.00M$476.00M | +35.5% |
| EPS (Basic) | $0.08$0.06 | +32.2% |
| EPS (Diluted) | $0.07$0.06 | +33.0% |
| Shares Outstanding (Basic) | 8.46B8.26B | +2.4% |
| Shares Outstanding (Diluted) | 8.64B8.48B | +1.9% |
05—Questions
Frequently Asked Questions
How did Amazon's net sales perform in 2008, and what were the key drivers?
In fiscal year 2008, Amazon's net sales increased by 29% to $19.17 billion. This growth was driven by increased unit sales in both its North America and International segments, attributed to lower prices for customers (including free shipping offers and Amazon Prime), a larger sales base in growing categories like electronics, improved inventory availability, and expanded product selection.
What is the company's financial health and liquidity situation as of the end of 2008?
Amazon ended 2008 with a strong liquidity position, holding $3.7 billion in cash, cash equivalents, and marketable securities. The company also reported a healthy free cash flow of $1.36 billion, demonstrating its ability to generate cash from operations after capital expenditures. Long-term debt was $409 million.
What are the main risks Amazon highlighted in its 2008 10-K filing?
Amazon highlighted several key risks, including intense competition from both online and physical retailers, the strain of rapid global expansion on its resources, risks associated with new product and service introductions, potential fluctuations in operating results due to economic conditions and consumer spending, challenges in international market expansion, operational risks related to fulfillment centers and inventory management, and the evolving regulatory landscape for the internet and e-commerce.
How is Amazon's business segmented, and what is the performance of each segment?
Amazon's operations are organized into two principal segments: North America and International. In 2008, the North America segment generated $10.23 billion in net sales with a 26% growth rate, while the International segment generated $8.94 billion with a 33% growth rate. The company anticipates that the International segment will eventually represent 50% or more of its consolidated net sales.
06—Continue