, Inc. (NASDAQ:AMZN) announced its earnings for the fourth quarter of 2012 today. The company earned 21 cents per share in the three months and took in revenue of $22.7 billion. After the release of the earnings report, the firm’s shares were down by more than 3% in after-market trading.


Analysts were expecting the company to announce earnings of 29 cents per share, and revenues of $22.3 billion. The third quarter of the year saw the company lose 23 cents per share, and take in revenues of $13.6 billion.

In the last three months of 2011, the company earned 38 cents per share and took in revenues of 17.4 billion. For the entire 2011, the company earned $1.37 per share, and took in revenues of $48.12 billion. This year’s revenues, although well above last year’s profits, is still low. That happens to be the exact strategy of the compan’s CEO Jeff Bezos.

Bezos still sees the internet sphere in a Wild West, frontier paradigm. He does not think the market has even close to developed, and he doesn’t think that the best thing to do right now is to get too bogged down in margins and profitability. His strategy is to grab as much internet real estate as possible, setting, Inc. (NASDAQ:AMZN) up for an incredible future when the internet does come of age.

That strategy, measured in revenue and sales rather than earnings per share, seems to be working. Revenue is well up year on year, Kindle sales are still rising, and the company released new product lines in 2012, offering more to the tech market, often at lower prices than its competitors.

According to a report from BCG, released in the hours leading up to the report, Inc. (NASDAQ:AMZN) had the highest valuation and the lowest operating margin of any of the technology companies they were covering. Despite those low margins, the analysts do not expect the company to attempt to raise them, in line with the CEO’s comments.

That report rated Amazon hold, and put a price target of $276 on the firm. Amazon shares were trading at around $268.70 today, and were down by more than 2% in anticipation of the earnings announcement.

Amazon is currently trading at a P/E ratio of more than 3,600, a crazy valuation based on low annual earnings per share, and a rising stock price. A valuation that high would be crazy for most companies, but, Inc. (NASDAQ:AMZN) has an artificially low EPS this year, because of write downs, and a poor third quarter. 2013 EPS is expected to come in at closer to $1.70, giving the firm a more reasonable valuation.

Amazon’s top three sales items in that third quarter were three different models from its Kindle line. The company earns little to nothing on the sale of each Kindle device, relying on content revenue to make up for the shortfall. That model is, like almost everything else the company does, based on a long term view, and it will take some time before its content service Amazon Prime begins to provide large revenue streams.