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Thu April 25, 2013
Amazon profit falls, but analyst says not to worry
Amazon’s first-quarter profit dropped 37 percent, but at least one analyst says that’s nothing to worry about; it's all part of Amazon's master plan to keep edging out competitors by investing deeply.
Profit fell even as sales rose 22 percent to more than $16 billion. Doing the math makes you wonder where all that money is going.
One thing the company is spending money on: TV rights for shows like Downton Abbey. And Amazon sells its Kindle Fire tablet for very little profit as part of a strategy to push sales of digital books and videos.
Morningstar analyst RJ Hottovy says the plan is working.
"All these things are designed to keep people from shopping elsewhere and really make sure Amazon is their first destination. And that’s what makes Amazon so attractive and one of the more disruptive forces in the consumer and retail sector right now," Hottovy said.
Amazon is also investing in its own original content. Amazon Studios has produced pilots of 14 comedies and kids’ shows with stars like John Goodman and Bebe Neuwirth.
Amazon is shaking up the world of TV and film production along with Netflix, which has a hit political drama called House of Cards starring Kevin Spacey.