This summary is based on the second quarter fiscal 2008 earnings call conducted by Amazon.com Inc. (AMZN: chart) on July 23, 2008.

Management:

- Sr. VP & CFO: Thomas Szkutak
- President & CEO: Jeffrey Bezos
- VP IR: Rob Eldridge

Key Investors Issues

- Worldwide revenue rose 41% to $4.1 billion from $2.89 billion in 2007.
- Income grew 103% to $158 million or 37 cents a share from $78 million or 19 cents a share in the prior year.
- Accounts payable increased 52% to $1.96 billion and accounts payable days increased to 58 from 54 in the prior year.

Half Year Highlights:

- Sales increased 40% to $8.2 billion from $5.9 billion in 2007
- Net income was $301 million or 72 cents a share, up 59% from $189 million or 45 cents a share in the prior year.
- Cash and cash equivalents increased to $2.5 billion.

Second Quarter Highlights

Trailing 12-month free cash flow increased 16% to $816 million, while return on invested capital was 29%, down from 39%.

- Worldwide revenue grew 41% to $4.06 billion, or 35% excluding the $182 million favorable impact from year-over-year changes in FX from $2.89 billion in 2007 as media revenue increased to $2.41 billion, up 31%, or 25% excluding foreign exchange.
- EGM revenue increased to $1.53 billion, up 58% or 52% excluding foreign exchange rates.
- Worldwide EGM increased to 38% of worldwide sales, up from 34%.

Worldwide unit growth was 32% as active customer accounts exceeded $81 million, up 18%.

- Worldwide active seller accounts were more than $1.4 million, up 18% and seller units were 29% of total units, unchanged from the prior year.
- Worldwide gross profit was $967 million, up 38%.
- Fulfillment, marketing, tech and content and G&A combined was $722 million, or 17.8% of sales, an improvement of 83 basis points year-over-year.
- Tech and content was $218 million, or 5.4% of revenue compared with 6.1%.

Income grew 103% to $158 million or 37 cents a share from $78 million or 19 cents a share in the prior year due to a $53 million non-cash gain recognized on the sale of European DVD rental assets and sales growth.

- Cash and marketable securities increased $789 million to $2.63 billion year-over-year.
- Inventory increased 51% to $1.11 billion and inventory turns improved to 13, up from 12.9 in the prior year even as the firm expanded selection, improved in-stock levels across product categories and geographies and introduced new product categories.
- Accounts payable increased 52% to $1.96 billion and accounts payable days increased to 58 from 54 in the prior year.
- Investments in net fixed assets increased $208 million from a year ago to $651 million and on a trailing 12 month basis capital expenditures increased $78 million, up 40% year-over-year.
- Approximately $473 million in principal amount of the four-and-three-quarter convertible subordinated notes converted into 6.1 million shares of common stock and Amazon redeemed $27 million from principal amount of the notes.

Segment Highlights:

- In the North America segment revenue grew 35% to $2.17 billion as media revenue grew 25% to $1.15 billion.
- EGM revenue grew 52% to $920 million representing 42% of North America revenues, up from 38% following strong sales in electronics, toys and baby, consumables, and soft goods, which includes jewelry, apparel, shoes, and sporting goods.
- North America gross profit grew 29% to $559 million and gross margin decreased 129 basis points to 25.8% driven by changes in product mix and lower prices for customers including free shipping offers at Amazon Prime.
- Operating income increased 17% to $96 million, a 4.4% operating margin.

- In the international segment revenue grew 47% to $1.89 billion as media revenue grew 38% to $1.26 billion, or 25% excluding FX, and EGM revenue grew 68% to $611 million, or 52% excluding FX.
- EGM now represents 32% of international revenues, up from 28%.
- International gross profit grew 52% to $408 million, or grew 38% excluding foreign exchange rates.
- Gross margin increased 66 basis points to 21.5% driven by increases in product sales, improvements in vendor pricing and higher other revenue partially offset by lower prices to customers and changes in product mix.
- Operating income increased 80% to $149 million, a 7.9% operating margin.

Other Highlights:

- Amazon.com customers can now take advantage of Bill Me Later, a new alternative payment method.
- Bill Me Later''s next-generation payments service provides customers another convenient payment option when shopping on Amazon.com.
- The Company acquired Fabric.com, a leading online fabric store that offers custom measured and cut fabrics, as well as patterns, sewing tools and accessories.
- Amazon.co.jp launched Convenience Store Pickup Service, which offers customers the option to pick up their orders at any of the 8,500 Lawson stores throughout Japan.

Over 400,000 developers have registered to use Amazon Web Services (AWS), up more than 30,000 from last quarter.

- AWS released a new family of instance types, the high CPU family and these instances have proportionally more CPU resources than RAM and are well suited for compute-intensive applications such as rendering, search indexing and computational analysis.
- Amazon.com introduced a limited beta version of Amazon Video On Demand, allowing customers rent or buy ad-free movies and television shows and watch them instantly within their web browser on Macs or PCs and through Sony BRAVIA television sets with the use of the Sony BRAVIA Internet Video Link.
- Kindle selection continued to grow with more than 140,000 titles available.

Fiscal 2008 Outlook:

- Third quarter net sales of between $4.2 billion and $4.425 billion expected, a growth of between 29% and 36%.
- Operating income to be between $115 million and $160 million, or between 6% decline and 31% growth.
- For calendar year 2008, the firm expects net sales of between $19.35 billion and $20.1 billion, a growth between 30% and 35%.
- Operating income to be between $745 million and $920 million, or between 14% growth and 40% growth.
- Capital expenditures including capitalized software development costs are expected to be approximately $325 million.