Amazon Slides: Q2 Revenue Up 29% To $12.83B, But Net Income Plunges 96% To $7M, Shares Follow

Amazon announced its second quarter results today, coming in slightly below estimates with operating cash flow slightly ahead at $3.22 billion year-over-year, compared to $3.21 billion in the year prior. Meanwhile, free cash flow decreased 40 percent to $1.10 billion year-over-year, compared to $1.83 billion the year prior.

The eCommerce giant’s revenue, on the other hand, trended up significantly, increasing 29 percent to $12.83 billion in Q2 — compared with $9.91 billion in the second quarter. A definite bright spot for Amazon. The company was quick to follow by saying that, other than the $272 million it attributes to the “unfavorable exchange rate” through the quarter, net sales “would have grown 32 percent” compared with Q2 2011, the company said.

Both operating income and net income took big hits in the second quarter, with income coming in at $107 million year-over-year in Q2, compared to $201 million in Q2 2011. Again, Amazon attributed this to the unfavorable exchange rates during the quarter, although the impact on net income was less severe, with the company estimating the impact at $8 million.

Net income showed a more pronounced slide, decreasing 96 percent in Q2 to $7 million, or $0.01 per diluted share, compared to net income of $191 million, or $0.41 per diluted share in Q2 2011. Of that 96 percent drop, Amazon estimated that $65 million of the net loss was due to its acquisition and integration of Kiva.

In his statement today, Amazon Founder and CEO Jeff Bezos tried to paint a positive picture of the second quarter earnings, focusing instead on the bargain value of Amazon Prime compared to competitors and the consistency in pricing over the years:

Amazon Prime is now the best bargain in the history of shopping – that is not hyperbole … We successfully launched Prime seven years ago with free unlimited two-day shipping on one million items. The price of annual membership was $79. Since then, Prime selection has grown to 15 million items. We’ve also added 18,000 movies and TV episodes available for unlimited streaming. And we’ve added the Kindle Owners’ Lending Library – borrow 170,000 books for free with no due dates – it even includes all seven Harry Potter books. What hasn’t changed since we launched Prime? The price. It’s still $79.

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