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Thu July 25, 2013
Amazon.com Posts 2Q Loss, Higher Revenue
Amazon.com is reporting a loss in the second quarter as higher revenue was not enough to make up for rising operating expenses.
Amazon.com Inc. said Thursday that its loss was $7 million, or 2 cents per share, in the April-June quarter. That's down from earnings of $7 million, or 1 cent per share, a year ago.
Revenue rose 22 percent to $15.7 billion from $12.83 billion. Analysts, on average, were expecting earnings of 5 cents per share on revenue of $15.73 billion.
Amazon’s been spending a lot of money. It’s struck deals with media companies like Viacom to license popular TV shows for its digital streaming service. And it’s been building out its cloud computing infrastructure to compete with companies like Microsoft, IBM and Google.
Morningstar analyst R.J. Hottovy says that’s why Amazon’s reporting a loss even though sales grew. He says the company’s forecast for next quarter rattled some investors.
"The question’s always been whether or not you can monetize this business, and with the company guiding to another loss in the third quarter just keeps those questions coming," Hottovy said.
Hottovy says long term, Amazon’s strategy makes sense. He says cloud computing and digital media offer bigger profit margins compared with Amazon’s regular retail business. But those profit margins won’t come until after the investments have been made.
Amazon is forecasting revenue of $15.45 billion to $17.15 billion for the current quarter. Analysts were expecting $16.97 billion. And the company predicted an operating loss between $440 million and $65 million.
Amazon's stock fell 3 percent to $294.26 in extended trading after the results were released.