Amazon Reports High Sales but Modest Net Income

That is the long-established Amazon story, and those who expected to hear it again Thursday were not disappointed.

The company reported sales of $12.8 billion, up 29 percent, in the second quarter while it eked out net income of $7 million, or a penny a share.

Those results essentially matched expectations. Analysts had estimated the Seattle-based retailer would earn 2 cents a share, down from 41 cents a share in the second quarter of 2011.

In what is becoming a routine warning, Amazon said that profit in the current quarter would remain elusive. Revenue might grow as much as 31 percent, the company said, but it was expecting a loss. Losses at Amazon were routine in its early years but in recent years it has made a profit, albeit a small one.

This would be devastating news from some Internet companies. But Amazon bulls were unfazed, saying the retailer was investing, as always, in the future.

“If they keep this up, there’s a good possibility that you’re looking at shopping malls going the way of the record store and the bookstore and the video rental store,” said Jason Moser, who covers Amazon for the Motley Fool investment site.

Amazon shares Thursday were up $3 to $220 during regular trading. The stock is trading only about 10 percent below its record high, with a stratospheric price-to-earnings ratio of about 170. In after-hours trading, shares continued rising.

Since its founding in 1994, Amazon has been focused on broadening its product and customer bases, not pumping up its profit margins. And the growth has been tremendous — it is now one of the country’s largest retailers. Even in North America, its most established market, it has been growing consistently more than twice as fast as the e-commerce market as a whole, a Forrester Research report released Thursday noted.

Amazon is building 18 new fulfillment centers around the world this year. In the United States, many of them are close to major cities, including New York City, San Francisco and Los Angeles. In a conference call with analysts, Thomas J. Szkutak, Amazon’s chief financial officer, said, “We’re investing certainly for the long term.”

In the past, Amazon declined to build warehouses in states where it had many customers, because it would then have to collect sales taxes from them. Now the promise of offering these areas even faster delivery seems to be more of an imperative than continuing to fight the tax issue.

Amazon fans probably dream of ordering books or bagels and getting them the same day. But Mr. Szkutak indicated this would remain a dream. “We don’t really see a way to do same-day delivery on a broad scale economically,” he cautioned.

Six of the new warehouses are already open. Getting some of the others ready for the all-important holiday season helps explain the predicted absence of profit in the third quarter. The centers are a large factor in Amazon’s accelerating head count, which is up 60 percent over the last year to 60,000 employees.

One word that was little mentioned during the call by either Mr. Szkutak or the analysts: Kindle. Amazon’s tablet, the Kindle Fire, was introduced last fall in an ocean of hype. New models are seen by some as overdue.

“We’re excited about the road map we have” for e-readers and e-books, Mr. Szkutak said. He declined to say what that map was.