Amazon Reports That Profit Margin Slid

Amazon.com sales got a boost from a healthy holiday season. Digital book sales were a particular bright spot. But rising costs hurt profits. The company reported Thursday that revenue missed forecasts.

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RENEE MONTAGNE, host:

Amazon.com reported fourth-quarter profits of more than $400 million yesterday. The Internet retailer's profits were not as robust as some were hoping. Still, along with the financial numbers, Amazon also reported that its customers are now buying more digital books than books in any other format.

Heres more from NPRs Wendy Kaufman.

WENDY KAUFMAN: Last summer, Amazon said that sales of digital books had surpassed those of Hardcover versions. Yesterday, the company said downloadable digital books had surpassed paperbacks as well.

Author, Librarian and MORNING EDITION commentator, Nancy Pearl.

Ms. NANCY PEARL (Librarian, NancyPearl.com): I think that's significant that its paperbacks, because then its no longer price its convenience.

KAUFMAN: Pearls not surprised by the success of e-books but shes not happy about it.

Ms. PEARL: Most of the things that weve done to make life more convenient for people has come at a price, whether its having face-to-face interactions with your bookseller or your librarian, or wandering into the store to browse.

KAUFMAN: Amazon sold millions of its Kindle book reading devices over the holiday period. And the company said that for the first time ever, it had sales of more than $10 billion in a single quarter.

But says research analyst Aaron Kessler of the firm, Think Equity...

Mr. AARON KESSLER (Research analyst, Think Equity): Its a strong quarter but it fell short of investor expectations, so from that standpoint, it is a disappointment.

KAUFMAN: Spending especially on new distribution centers was up and overall profit margins were less than Wall Street expected.

Wendy Kaufman, NPR News.

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