Bezos: With ebook sales up 70% in 2012, Amazon has hit “transition” it expected

Amazon announced fourth-quarter earnings slightly below investor expectations Tuesday afternoon — but operating income, widely viewed by investors as an important measure of the company’s overall health, rose, driving shares up in after-hours trading.
Net income for the quarter was $97 million, or $0.21 per share, on revenue of $21.27 billion — compared to profits of $177 million on revenue of $17.43 billion a year ago. Operating income rose 45 percent to $405 million.
Analysts had expected earnings of $0.27 per share on revenues of $22.3 billion, and $506 million in operating income.
In the release, CEO Jeff Bezos called out ebooks in particular: “We’re now seeing the transition we’ve been expecting. After five years, ebooks is a multi-billion dollar category for us and growing fast — up approximately 70 percent last year. In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5 percent.” The company didn’t share actual ebook numbers, but North American media revenues were $2.9 billion for the quarter and $9.19 billion for the year — up 13 percent and 15 percent, respectively, over 2011. International media revenues were $3.6 billion for the quarter and $10.75 billion for the year.
As usual, Amazon did not disclose Kindle device sales. The company released new Kindle Fire tablets and the Paperwhite e-reader in September 2012. The earnings release noted that Kindle Fire HD is still “the #1 best-selling, most gifted, and most wished for product” on the site, but didn’t tout any specific holiday sales nuggets the way it did in 2011. In an investor call following the earnings report, CFO Tom Szkutak said the company wasn’t able to fulfill all the orders it got for Kindle Paperwhite: “We would have had more sales in Q4 if we were able to keep up with the demand, and so the team is working very hard to make sure we have good in-stock going forward on that product.”
North American sales of electronics and other general merchandise were $8.5 billion for the quarter and $23.27 billion for the year — up 24 percent and 34 percent, respectively, over 2011.
Sales of Amazon Web Services — which get lumped into the “other” category —  looked like a bright spot for the quarter. “Other” sales in North America logged $769 million for the quarter, up 68 percent from $459 million a year earlier. That category also includes things like branded credit cards, but most analysts say AWS makes up the bulk of the number. However, it’s unclear how profitable AWS is.
For the full year, revenue was $61.09 billion, up 27 percent from 2011. Operating income fell for the full year to $676 million, from $862 million in 2011. The company saw a net loss of $39 million compared to net income of $631 million the previous year.
For the first quarter of 2013, the company told investors to expect revenues between $15 billion and $16.6 billion, with guidance on operating income ranging from -$285 million to $65 million.
A previous version of this story stated Amazon’s revenues in millions, not billions. I’ve now fixed that. The story was updated several times throughout the afternoon and during the investor call.
Amazon is holding an investor call at 2 p.m. PT, and we will be on the call.