While retail sales for 2008 posted the first loss in recent memory, Amazon bucked the trend, recording double-digit growth. But how long can the leading online retailer maintain its momentum?

Amazon’s revenue of $6.7 billion in the fourth quarter of last year earned the company 52 cents per share. The earnings of $225 million grew 18 percent over the same period last year. These earnings topped Wall Street’s consensus of 39 cents per share.

Analyst Gene Munster of Piper Jaffray predicted that Amazon was “clearly the best e-commerce company in a bad consumer spending environment.” That was before Amazon’s results were announced and Munster’s prediction was 33 cents per share.

Amazon reported earnings of $645 million for the year, on revenue of $19.17 billion, up 28 percent from 2007. However that kind of sequential growth might not be possible in the current economic climate.

The outlook for Amazon’s first quarter isn’t necessarily as rosy. The company estimates that earnings could come in anywhere from $125 million and $210 million.

Even Amazon seems unsure of its ability to keep growing sales in 2009. The expected range puts revenue at anywhere from 6 percent growth to a 37 percent decline.

Amazon is focusing on its Web services business to drive growth through the downturn. The company lumps its Web services lines of business under “Other” on its balance sheet.

The “Other” category was responsible for revenue $175 million for the fourth quarter, up from $131 million a year ago. While this may not seem that large, it’s a business where margins improve along with increasing sales.

Amazon has already demonstrated its ability to see well beyond its roots as an online bookseller. By engaging a community of online stores and a dizzying array of suppliers, Amazon has become the source for anything and everything consumers can imagine.

Whether or not the company can expand during the downturn by entering new markets is still up in the air. However it’s safe to say that Amazon will emerge from the economic quagmire an even more dominant in the e-commerce sector.

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Entry was posted on Friday, January 30th, 2009 at 10:22 am under Amazon, Ecommerce, Retail, Technology.

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