Amazon has reported its earnings for the second quarter of 2012, with revenue growing 29% to $12.83 billion, but operating profit and net profit declining to $107 million and $7 million respectively. Amazon’s operating margin reduced to less than 1% in the last quarter.

Amazon’s cash reserves (cash, cash equivalents and marketable securities) declined to around $5 billion by the end of Q2 2012.

Amazon generated close to $4.12 billion from its Media business, and $8.16 billion from its Electronics and general merchandise business. The remainder was generated from sources like AWS and other miscellaneous activities. Media revenues grew at nearly 13%, while EGM revenues grew at a scorching 38%.

Interestingly, all of Amazon’s top 10 selling items were digital products — Kindle, Kindle books and accessories, which suggest a clear trend.

Bezos seems to be very optimistic about Amazon Prime. Here’s his official statement on one of Amazon’s major revenue engines:

“Amazon Prime is now the best bargain in the history of shopping – that is not hyperbole,” said Jeff Bezos, founder and CEO of Amazon.com. “We successfully launched Prime seven years ago with free unlimited two-day shipping on one million items. The price of annual membership was $79. Since then, Prime selection has grown to 15 million items. We’ve also added 18,000 movies and TV episodes available for unlimited streaming. And we’ve added the Kindle Owners’ Lending Library – borrow 170,000 books for free with no due dates – it even includes all seven Harry Potter books. What hasn’t changed since we launched Prime? The price. It’s still $79. We’re very grateful to our Prime members, and thank them whole-heartedly for the business and for the word-of-mouth that has made this program grow.”

via Amazon – SEC