Despite strong Kindle sales, Amazon's fourth-quarter disappoints

Despite strong sales of its Kindle devices during the holidays, Amazon.com's fourth-quarter earnings report missed expectations Tuesday, sending the online retail giant's shares plunging in after-hours trading.

The Seattle e-commerce company said its sales rose 35% year over year, to $17.4 billion for the three months ended Dec. 31. But Wall Street analysts had expected sales to rise 40%, to $18.3 billion, according to AllThingsD, which cited FactSet Research. 

Meanwhile, profit plunged 58% to $177 million, or 38 cents a share, as Amazon continued to spend heavily on development and infrastructure to support its Kindle business and other costs. That was compared with profit of $416 million, or 91 cents, in the year-earlier period. 

Amazon, which reported its results after the markets closed, saw its shares quickly fall more than 8.5%, to $177.90, in after-hours trading.

Jeff Bezos, Amazon's founder and chief executive, said "millions" of customers purchased Kindle devices over the holidays, making it the company's best-selling item in the U.S. and Europe. During the nine-week holiday period ended Dec. 31, sales of Kindle e-readers and Kindle Fire tablets increased 177% over the same period last year. The company didn't release exact device sales.

For the first quarter, Amazon projected sales of $12 billion to $13.4 billion, up 22% to 36% compared with the first quarter of 2011. 

The company will hold a live webcast at 2 p.m. PST to discuss the earnings report.

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Photo: Amazon's Kindle devices at a distribution center. Credit: Chris Ratcliffe / Bloomberg

Apple hires John Browett, of UK's Dixons, to head retail business

For Apple Inc.'s newly appointed head of retail, the Genius Bar is high.

The company said on Tuesday it had hired John Browett, chief executive of European technology retailer Dixons, to head Apple's global fleet of 361 stores, starting in April.  Apple's fast-growing chain of stores pulled in $6.1 billion in sales last quarter, a nearly 60% jump over the same period a year ago, and accounting for 13% of the company's revenue.

Apple stores are known for their clean, spacious look, attractive architecture, and attentive customer service members.  The company also has a penchant for opening the stores in marquee locations, including New York's Grand Central Station, which took the wraps off of an Apple store in December.

Meanwhile Dixons stores, like the PC World pictured here, are reminiscent of U.S. chains Best Buy and Fry's Electronics; lots of square footage, row upon row of shelves packed with products and, frequently, bright primary color schemes. (At Best Buy, the employees are known as "Blue Shirts.")

The apparent gap between that aesthetic and the minimalist, elegant look and feel of Apple stores led some observers to wonder whether Browett's approach might clash with Apple's. 

But Tim Cook, Apple's chief executive and Browett's new boss, wasn't worried.

“Our retail stores are all about customer service, and John shares that commitment like no one else we’ve met,” Cook said in a statement.

Browett replaces Ron Johnson, who built Apple's retail chain into what it is today, and who left last June to become chief executive of J.C. Penney, and who is trying to simplify the way the old-line department chain works (among the strategies for its 1,100 stores: fewer coupons, fewer sales and lower overall prices). 

Browett will move in the other direction, from a chain of 1,200 stores that operate across Europe and sell products from hundreds of manufacturers, to a network of smaller storefronts that sell a relative handful of products, nearly all of them from Apple.

Apple executives are likely betting that Browett's knack for retail isn't reflected by Dixons stock performance. The company's stock prices have dropped more than 90% during Browett's tenure, which began in 2007.

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Photo: John Browett will take on his new job at Apple as senior vice president of retail in April.  Credit: Associated Press

Start-up spotlight: LuxeYard brings social aspect to flash sales

LuxeYard, a luxury home furnishings and decor flash sale site, officially launched on Tuesday with the aim of making e-commerce more social.

The Marina del Rey start-up (which will soon move to Culver City) is the latest newcomer to the rapidly growing flash sale marketplace, which includes One Kings Lane, Fab.com, Gilt and Rue La La. The site offers two new approaches to the usual for-members-only, limited-time sales: concierge buying and group buying.

With concierge buying, LuxeYard members can request items they'd like to purchase at a discounted price. The most popular product will be voted up and LuxeYard will then source either the exact product "or one known to be comparable or even higher quality," the company said. 

Group Buy allows members to push prices down on certain items by using social media and networks to encourage others to purchase that product. The price is driven down if the product receives enough buzz. Everyone who purchases the Group Buy item will pay the final lowest price. 

Chief Executive Braden Richter said the company was evolving the concept of flash sales by putting the sourcing and pricing of goods in the hands of consumers.

Flash sales were "originally designed to liquidate inventory; it was sort of born out of 2009," he said at a launch party Tuesday night at the Roosevelt Hotel in Hollywood. "I think a lot of the current flash sale companies are now trying to figure out what to do. We've come into it at a perfect time to create this next generation."

Like other flash sale sites, LuxeYard features a community of design professionals and stylists, dubbed trendsetters, who offer product recommendations and other advice. Trendsetters include Nicky Hilton; Daniella Clarke, founder of Frankie B Jeans; and designer Faye Resnick.

The site is free to join and launched with $3.5 million in financing from private investors; about 185,000 people had already signed up during the site's pre-launch beta phase. On Tuesday, LuxeYard averaged about five new members a minute, Richter said.

The company has about 30 employees and offers luxury home furnishings -- including furniture, textiles, cookware and lamps -- at 70% off retail. LuxeYard doesn't hold inventory or operate warehouses; instead, manufacturers ship products directly to consumers. 

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Image: Screen shot of LuxeYard's home page. Credit: LuxeYard 

Steve Jobs doll withdrawn after objections by his family, Apple

An eerily lifelike Steve Jobs doll will not be sold because the company behind the product received "immense pressure" from Apple's lawyers and the late CEO's family to not sell the figurine.

"We understand that this decision will cause many of the fans disappointment, but please forgive us as there is no other alternative unless to have the blessing from Steve Jobs family," In Icons said in a rambling statement on its website, which features quotes from Jobs and numerous images of the doll prototype. "We will aim to have full refund to the fans who have pre-ordered."

In Icons had been taking pre-orders of the 12-inch doll, which cost $100 and came with "one realistic head sculpt and two pairs of glasses," "one highly articulate body and three pairs of hands," one black turtleneck, one pair of blue jeans and two apples -- one with a bite taken out of it. 

The company had planned to start shipping the dolls in February and said on its website that it was running out of stock. 

In the statement announcing the company's decision to not offer the doll, In Icons said the figurine was adjusted "countless times" to achieve the Apple visionary's likeness. The company said making the doll was a tribute to Jobs.

"Regardless of the pressure, I am still Steve's fan, I fully respect Steve and his family, and it is definitely not my wish or intention that they be upset," said the statement, which was signed "inicons.com." "Though we still believe that we have not overstepped any legal boundaries, we have decided to completely stop the offer, production and sale of the Steve Jobs figurine out of our heartfelt sensitivity to the feelings of the Jobs family." 

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Image: A screenshot showing In Icons' Steve Jobs doll. Credit: In Icons

Zappos website hacked; credit card database not affected, CEO says

Zappos.com, the popular online shoe site, was the victim of a cyber attack by a hacker who gained access to part of the company's internal network through one of its servers, Chief Executive Tony Hsieh said in an email to employees Sunday. 

Hsieh said the Henderson, Nev., company was cooperating with law enforcement to undergo "an exhaustive investigation" and that the database that stores customers' credit card and other payment data was not affected or accessed.

"We've spent over 12 years building our reputation, brand, and trust with our customers. It's painful to see us take so many steps back due to a single incident," Hsieh said in a separate email to customers. "Over the next day or so, we will be training everyone on the specifics of how to best help our customers through their password change process now that their passwords have been reset and expired. We need all hands on deck to help get through this."

The company said it would notify the more than 24 million customer accounts in its database about the incident and provide instructions on how to choose a new password; the company has already reset and expired existing passwords. 

In the email to shoppers, Zappos said customers' personal information -- including their name, email address, billing and shipping addresses, phone number, the last four digits of their credit card number and/or the cryptographically scrambled password on their account -- may have been compromised.

"In order to service as many customer inquiries as possible, we will be asking all employees at our headquarters, regardless of department, to help with assisting customers," Hsieh said. "We have made the hard decision to temporarily turn off our phones and direct customers to contact us by email because our phone systems simply aren't capable of handling so much volume."

The company is directing customer concerns and questions to an internal Web page.

Zappos, which sells shoes and has since expanded to other retail categories, was bought by Amazon.com in 2009. The company has become known for its customer service and for its quirky company culture led by Hsieh -- including head-shaving events, impromptu parades around the cubicles and employee birthday pranks.

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Top photo: Zappos' company headquarters in 2010. Credit: Isaac Brekken / For The Times

Lower photo: Zappos Chief Executive Tony Hsieh. Credit: Isaac Brekken / For The Times

Nokia Lumia 710 Windows Phone is free at Wal-Mart with contract

The Lumia 710, Nokia's first Windows Phone to hit the U.S., barely went on sale on Jan. 11 and already Wal-Mart is undercutting other retailers by giving the new phone away for free on a two-year contract.

T-Mobile USA, which launched the phone, sells the Lumia 710 for $49.99 on a two-year data plan, as do other retailers such as Best Buy. The price drop by Wal-Mart is a fast one and it's unclear if other retailers or T-Mobile itself will follow suit.

But if we do see more price drops on the Lumia 710, they will probably be motivated in part by the pending arrival of the new Lumia 900 at AT&T, which is rumored for sometime in March. An official release date and price haven't yet been disclosed for the Lumia 900.

The Lumia 900, which made its debut at the Consumer Electronics Show in Las Vegas last week, has  a 4.3-inch display and a unique polycarbonate body.

But while the 900 packs a larger screen and a bit more style, it and the 710 are very similar on the inside, with both phones running Windows Phone 7.5 Mango on a 1.4-gigahertz Qualcomm processor and 512-megabytes of RAM.

The Lumia 710 has 8 gigabytes of built-in storage, while the Lumia 900 has 16 gigabytes. And the Lumia 710 features a 5-megapixel camera with a single-LED flash, while the Lumia 900 has an 8-megapixel camera with a dual-LED flash.

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Photo: The Nokia Lumia 710 Windows Phone from T-Mobile USA. Credit: Armand Emamdjomeh / Los Angeles TImes

CES 2012: Virtual dressing room eliminates need to take off your clothes

Remember Cher's virtual closet from "Clueless," the one that helped the fashionable teen choose her outfits by digitally placing the clothes on an image of her body? Now you can have a better version of it.

At the Consumer Electronics Show this week, a Calabasas company was giving demonstrations of Swivel, a real-time virtual dressing room that takes a lot of the hassle out of shopping -- no more long waits in the fitting room line loaded down with an armful of clothes, or the tedious process of getting dressed and undressed several times during one trip to the mall.

To use the Swivel system, which works by utilizing motion-sensing technology, stand a few feet in front of a webcam or Microsoft Kinect device. A live image of yourself will appear on a connected television or computer screen, along with a selection of categories like clothing, jewelry and handbags.

Select a category -- say, dresses -- by waving your hand over it. A lineup of gowns will appear on the right-hand panel; another wave of the arm selects the dress you want to try on and digitally overlays it over the live image of yourself.

Turn to the side and the dress will move with you; the product takes into account your unique body type, and items appear to be form-fitting. You can layer accessories onto the look by selecting necklaces and belts, or change the background image to a red carpet or city scene to put the look into context. The Swivel system also gives users outfit recommendations and enables them to send an image of the final look to their friends for approval.

FaceCake Marketing Technologies, which created Swivel using proprietary software, hopes the system will be used by retailers, in malls and at home.

FaceCake recently did a mall tour in Southern California to debut the system to shoppers. The average shopper tried on 66% of the items available, or about 45 products, far more than he or she would typically try on in a physical dressing room, said FaceCake Chief Executive Linda Smith.

"It's a virtual dressing room that makes things easy," she said during a demo for The Times at CES in Las Vegas. "It really puts the whole store in a little six-foot area."

With retailers' merchandise selections changing daily, Smith said the Swivel system would update its merchandise content regularly to give users the most up-to-date products. 

Swivel will be available later this year for consumers for in-home use and FaceCake is in discussions with a national mall operator to put Swivel in shopping centers, Smith said. A handful of retailers, including Banana Republic and Nordstrom, signed on for the mall tour, allowing their merchandise to be featured in the system.

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CES 2012: Play arcade games on your iPad -- with a joystick

It's all fun and games for one company at this year's Consumer Electronics Show.

Seattle's Discovery Bay Games wanted to combine the modern iPad with the old-school arcade experience to give gamers the best of both worlds. The end result: Atari Arcade, a $60 console featuring a joystick and four push buttons that connects with an iPad or iPad 2, enabling users to play classic games such as Centipede, Pong and Asteroids using the tablet as a screen but the console as the controls. 

"I think what people were missing was that real tactile experience of having the joystick and the buttons, because on the touchscreen you kind of lose the feeling," Discovery Bay Games spokeswoman Natalie Dent said. The tech and gaming company was giving demos of the device Monday at Digital Experience, a consumer electronics media event held in Las Vegas the night before the official opening of CES. 

Created through a partnership with Apple and Atari, the Atari Arcade was released at Target, Toys R Us and Apple stores during the holiday season last year and was a bestseller for Discovery Bay Games, Dent said. 

Consumers who buy the device have to download the Atari Greatest Hits app to their tablets to play the games; $9.99 gets you 99 classic arcade games.

Discovery Bay Games also released two other iPad-compatible devices, which the company calls "appcessories" on its website, over the holidays: the Duo Pop, a set of remote "poppers" (they look a bit like asthma inhalers) that operate as wireless game buzzers; and Duo Plink, a device geared toward younger children that sits on top of an iPad and acts as a scoring machine.

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Mini Apple Stores to open inside Target locations?

In an effort to expand its retail reach, Apple is reportedly planning to open mini Apple Store displays inside select Target locations later this year.

As many as 25 locations in smaller metro areas not large enough for Apple Stores of their own could end up with the in-Target Apple Store set-ups, "according to a source familiar with Apple's plans," the website AppleInsider reported Friday.

Officials at Apple weren't available for comment on the report -- the company's usual practice is to decline to comment on rumors -- but the tech giant has taken this type of approach before.

Hundreds of Best Buy locations feature Apple Store displays, with Apple signage and tables that match the look of what is seen in Apple's retail locations.

At some Best Buy stores, there are even Apple staffers on hand from time to time to explain products to customers and show off iPads, iPhones, iPods, iMacs and MacBook laptops as well as accessories.

Target sells iPods, iPhones and iPads but no Mac computers. That is likely to change with the Apple-Store-within-a-store plan, AppleInsider said.

The site also noted that although there are 1,752 Target locations and 245 Apple Stores in the U.S., there are also more than 600 BestBuy locations with mini Apple Store displays inside.

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Photo: Shoppers look at Apple products inside of a Best Buy store in San Francisco on Dec. 9, 2011. Credit: David Paul Morris / Bloomberg

Kindle Fire continues streak as Amazon's top selling item

The Kindle Fire tablet has, since its launch, sold more units than any other single item on Amazon.com.

But just how many tablets sold would that be exactly? Amazon isn't saying. As is the company's typical stance with its Kindle products, the Seattle company isn't offering up specific sales numbers.

Instead, on Thursday, the world's largest online retailer issued a statement saying that "2011 was the best holiday ever for the Kindle family as customers purchased millions of Kindle Fires and millions of Kindle e-readers."

As noted by our sister-blog Jacket Copy, so far this month, the Kindle Fire tablet and the Kindle and Kindle Touch eReaders, have sat in the top three spots for most sold items on Amazon.com, with the Fire ranking first, the Kindle Touch in second and the standard Kindle in third.

The retail giant also said that the Kindle Fire is the item most often found on Amazon.com wish lists too.

Without exact sales numbers, it's tough to judge just how well the $199 Kindle Fire is selling or whether or not it will reach analyst estimates of 5 million tablets sold before the end of the year.

Despite Amazon's continued stance on not disclosing how many Kindle Fire tablets it's selling, many analysts still project that the device will become the second-best selling tablet behind Apple's iPad.

Amazon also said that this Christmas Day was the "biggest day ever for Kindle book downloads" and that the No. 1  and No. 4 best-selling Kindle eBooks released in 2011 "were both published independently by their authors using Kindle Direct Publishing," Amazon's digital publishing platform.

"We are grateful to our customers worldwide for making this the best holiday ever for Kindle," said Jeff Bezos, Amazon's founder and CEO, in the statement.  "And in a huge milestone for independent publishing, we'd also like to congratulate Darcie Chan, the author of 'The Mill River Recluse,' and Chris Culver, the author of 'The Abbey,' for writing two of the best-selling Kindle books of the year."

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Photo: The Amazon Kindle Fire tablet. Credit: Armand Emamdjomeh / Los Angeles Times