Amazon apologizes for erasing Orwell books

Amazon.com Inc. CEO Jeffrey P. Bezos apologized to Kindle customers for deleting pirated copies of George Orwell novels 1984 and Animal Farm from their e-reader devices.

Kindle users were surprised last week to find that Orwell works they had purchased were removed from their electronic book readers and their money refunded.

Amazon said last Friday the books had been added to its catalogue using the company's self-service platform by a third party who did not have the rights to the books. However, that explanation differed from what Kindle users had been told by Amazon's customer service department, which implied that the removal was the publisher's choice.

On Thursday, ahead of the company's quarterly earnings release, Bezos posted a message on Amazon's Kindle Community blog apologizing for the way Amazon handled the matter.

"Our 'solution' to the problem was stupid, thoughtless and painfully out of line with our principles," he said. "It is wholly self-inflicted, and we deserve the criticism we've received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission."

Customers appeared to appreciate the statement, with many blogging their thanks.

Kindle sales still a secret

In a conference call with analysts Thursday, the company declined to give details about sales of its electronic reader, Kindle, the price of which Amazon lowered by $60 US to $299 in July. Sony shipped 400,000 of its competing Reader device between its original debut in late 2006 and January, company spokeswoman Valerie Motis said.

Without providing specifics, chief financial officer Tom Szkutak said Kindle sales "are exceeding our expectations" and the lower price has been "helpful." He wouldn't say if Amazon plans to release the Kindle outside the United States, but said the international market is "clearly an opportunity."

Overall the company reported that second-quarter earnings fell while sales rose, as the leading online retailer recorded a $51-million US payment to settle a long-standing dispute with former partner Toys "R" Us.

Amazon earned $142 million, or 32 cents per share, in the April-June quarter, 10 per cent lower than the profit of $158 million, or 37 cents per share, a year ago.

Sales climbed nearly 15 per cent to $4.65 billion, slightly below analyst estimates of $4.69 billion. Amazon's sales were helped last year by a $53-million non-cash gain from the sale of European DVD rental assets.

Sales of items such as books, CDs and DVDs inched up one per cent to $2.44 billion in the second quarter, while electronics and other general merchandise sales soared 35 per cent to $2.07 billion.

The company's North American sales rose 13 per cent, while international sales increased 16 per cent.

On Wednesday, the retailer expanded its reach, announcing its plans to buy online shoe store Zappos.com Inc. in a deal worth about $850 million.

Amazon shares lost $6.44, or 6.9 per cent, in after-hours trading. The company finished regular trading at $93.87.