Amazon Fourth Quarter Sales Up 42 Percent, Bezos Says "Millions Of People Own Kindles"

The holidays were good to Amazon, which just announced fourth quarter 2009 earnings. Sales were up 42 percent to $9.5 billion in the quarter, and net income shot up 71 percent to $384 million (or 85 cents a share, well above the analyst consensus of 72 cents). Free cash flow was up 113 percent to $2.9 billion. For the full year, sales were $24.5 billion, and net income was $902 million.

Amazon highlighted the success of its Kindle in its earning release, which is not surprising given all the comparison to the iPad which Apple announced yesterday. The one quote from CEO Jeff Bezos in the release is about the Kindle: “Millions of people now own Kindles. And Kindle owners read, a lot. When we have both editions, we sell 6 Kindle books for every 10 physical books. This is year-to-date and includes only paid books — free Kindle books would make the number even higher. It’s been an exciting 27 months.”

Beyond being vague about how many “millions” of people own a Kindle (is it two million or 20 million?), Amazon also mentions that there are now 410,000 books available on the Kindle. The depth and breadth of that catalog is the Kindle’s greatest strength. Amazon also emphasized that its digital books can by synched between its own family of Kindles as well as PCs, “iPhone, iPod touch and soon, Blackberry, Mac and iPad.”

The accounting recognition for the Kindle changed this quarter, with more of the total device price being recognized immediately instead of being deferred. During the conference call there was a mention of $500 million of deferred revenues from shipments from last year which will be apportioned in future quarters. Also asked whether its competitive position has now changed, Amazon emphasized that it will continue to focus on the strength of its existing relationship with publishers and on devices “purpose-built for reading. We believe readers deserve to have a dedicated device with great selection, at a great price.” But other than that would not discuss any competing devices (cough, iPad) or how they might impact the price of the Kindle. Amazon reconfirmed, however, that its Kindle app for the iPhone would be available on the iPad as well

Earnings slides are below: