Surprises in Amazon’s New Quarterly Report?

This afternoon, Amazon finally told investors what their sales were for the months from April through June — and they surprised even Wall Street’s analysts. Compared to last year, Amazon’s net sales for the period were 51% higher. It was “the fastest growth we’ve seen in over a decade,” Amazon’s CEO Jeff Bezos said in a statement — which at times sounded more like a sales pitch for the Kindle.

“Kindle 3G with Special Offers has quickly become our bestselling Kindle at only $139,” Bezos continued, touting the convenience of not having to hunt for a Wi-Fi hotspot. But he also revealed that Kindle sales were increasing — and at a faster rate than they were last year. Of course, there might be a simple explanation for that. Amazon released the cheaper $114 “Kindle with Special Offers” in April, which you’d
expect to increase sales from the three-month lull after Christmas.

But in general, Bezos insisted, Amazon’s sales growth was being driven by “Low prices, expanding selection, fast delivery and innovation…” (It sometimes seems like Amazon is talking in code words, since they never actually reveal specifically how many Kindles they’ve sold.) Fortunately, Bloomberg News talked to an industry analyst instead, who estimated that Amazon may have sold more than 8 million Kindles just in 2010. And more importantly, they estimate that Kindle readers already account for 5% of Amazon’s total sales.

In fact, Amazon’s now approaching more than one million ebooks that are available for sale in their Kindle store (besides the millions of free, out-of-copyright books). “The U.S. Kindle Store now has more than 950,000 books,” Amazon said in a statement today, “including New Releases and 110 of 111 New York Times Bestsellers.” What’s even more remarkable is that more than 800,000 books are available for less than $9.99, “including 65 New York Times Bestsellers.” In a Tuesday conference call, Amazon spoke of a “conversion from physical to digital” in their business, and seemed to hint that those offerings had been very popular with Amazon’s customers. (“We feel very good about those investments in terms of the traction we’re getting from a customer standpoint,” an Amazon official explained.)

Sales of the Kindle and electronic merchandise “are two big drivers for Amazon that continued unabated,” one analyst told Bloomberg News. Despite some pressure from costs, “Amazon is running on all cylinders,” another analyst commented. The dark cloud is the money Amazon’s been spending to achieve all these higher sales — but even there, the Kindle’s proving to be something Amazon officials point to with pride.

“We started investing in our Kindle businesses several years ago…” one Amazon official explained on Tuesday’s call, “and those have gotten great traction…” Amazon’s now opened 15 new distribution centers — which I’m guessing will play a role when Amazon finally releases an iPad-sized tablet, possibly offering free two-day shipping as part of the deal. In Tuesday’s conference call, Amazon used the profitability of the Kindle business as an example of why that’s necessary, saying the profits didn’t happen overnight. “Those are things that have happened over an extended period of time.”

There was a 34-minute question-and-answer period at the end of the call, and somebody finally asked directly whether Amazon planned to release their own multimedia tablet to compete with the iPad. But
while the question was asked, it wasn’t answered. (“We have a longstanding practice of not talking about what we might or might not do,” an Amazon official explained, “and so I can’t — I can’t help you with that question.”

I learned something I didn’t know. More than 45% of Amazon’s sales weren’t even in North America. (Amazon also has sites for Japan, China, France, England, Germany, and Italy.) Amazon’s total sales for just the last three months were $9.9 billion — and professional investors seemed to be positively impressed.

After the stock market closed, “late trading” pushed the company’s shares up a full 6.9%