All Is Well With Amazon, Except Its Rivals Are Not Sleeping

Updated on, Inc. (NASDAQ:AMZN) is one of the most fascinating companies in the market. Shaking up industries such as retail, publishing, digital media, and others, it continues to grow at a blistering rate, earning an annual revenue of $51 billion. The Kindle Fire HD is the number one best selling product across Amazon worldwide, followed by Kindle Preparation and the mini Kindle. However, while Kindle Fire made a splash when it was released, Apple Inc. (NASDAQ:AAPL) iPad remains the preeminent tablet.

All Is Well With Amazon, Except Its Rivals Are Not Sleeping, Inc. (NASDAQ:AMZN) posted 3rd Quarter net sales of $13.81 billion, a 31% increase over 3rd Quarter 2011 net sales at $10.8 billion. The net loss was $274 million, compared with net income of $63 million in 3rd Quarter 2011. Amazon’s operating loss was $28 million, compared with an operating income of $79 million in 3rd Quarter 2011. Operating cash flow increased 8% to $3.37 billion for the trailing months of 2012, compared with $3.11 billion for same period last year. Free cash flow decreased 31% to $1.0 billion for the trailing months of 2012, compared with $1.53 billion for the same period last year.

Between 2007 and 2011, Amazon’s profit margins have collapsed from a range of 3% to 4% to near 1% in the most recent quarters. On the competition side,, Inc. (NASDAQ:AMZN) is facing challenge from Apple Inc. (NASDAQ:AAPL), Barnes & Noble, Inc. (NYSE:BKS), Wal-Mart Stores, Inc. (NYSE:WMT), Netflix, Inc. (NASDAQ:NFLX), and others. Amazon’s rivals aren’t going down without a fight. Netflix, Inc. (NASDAQ:NLFX) is expected to return to profitability anytime from now, even though it posted a loss in the third quarter. Barnes & Noble demonstrated that Amazon is unlikely to enjoy monopoly in the e-book front, signing a deal with Microsoft Corporation (NASDAQ:MSFT) to keep Amazon on its toes. The release of Apple TV later in the year or next year could put more pressure on Amazon’s video offerings. However, Amazon is holding its ground. While Apple’s revenue of $156.51 billion dwarfs Amazon’s at $51 billion, that’s not the end of the story. Amazon earns more than Barnes & Noble at $7.16 billion, Netflix at $5.14 billion and easily earns above the industry average of $475.30 million.

Amazon, the market leader in online retail, is shaking up so many industries. It is leaving no stone unturned in its quest to work hard and charge less. It is spending a lot of money on digital media, hoping to gain market share, but media sales are growing much less faster than Amazon’s general merchandise segment, proving that the company is at heart a retailer.

Despite the intense competition from players like Apple Inc. (NASDAQ:AAPL), Barnes & Noble, Inc. (NYSE:BKS), Netflix, Inc. (NASDAQ:NFLX), Microsoft Corporation (NASDAQ:MSFT), and the rest, a recent report from Motley Fool chose Amazon as one of the three stocks that could make investors retire rich. It said Amazon appears to be consistently one step ahead of its rivals. The company is implementing network advantages and adding switching gadgets that other companies can’t match. Though Apple’s iPad outsells Amazon’s Kindle Fire, it has less pixels per inch, less efficient audio speakers, and doesn’t allow consumers watch television. According to experts,, Inc. (NASDAQ:AMZN) has surplus finance to carry it through the dramatic changes in the market place and develop products that will keep up its profitability in the foreseeable future.

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