Amazon posts first quarterly loss in more than four years

By on October 26, 2012, 7:30 AM

Amazon on Thursday posted a quarterly loss for the first time in more than four years. The retailer reported revenue of $13.8 billion, up 27 percent but still just under analyst expectations of $13.9 billion and right in the middle of their own predictions between $12.9 billion and $14.3 billion.

Amazon recorded a net loss of $274 million during the quarter, or $0.60 per diluted share, largely due to an investment in daily deals website LivingSocial. Even without the LivingSocial charge, the company with everything from A to Z would have lost $0.23 which is worse than most predicted. During the same time last year, the online retailer earned $63 million, or $0.14 per share. 

CEO Jeff Bezos stood by his company’s strategy of selling products as cheaply as possible. “Our approach is to work hard to charge less,” he said in a statement. Amazon favors selling devices like the Kindle Fire HD at near break-even pricing and relying on their vast ecosystem to generate revenue after the sale. Sure it’s tough on margins, but it’s even tougher on the competition.

It’s one of the reasons why the company’s tablet is the best-selling product on the site. Unsurprisingly, the next two best-selling products are the Kindle Paperwhite and the $69 Kindle. Amazon says they are selling more of each of these devices than they are the #4 bestselling product, the third book in the Fifty Shades of Grey series.

The company’s high end tablet, the $299 Kindle Fire HD 8.9”, is scheduled to ship on November 20.




User Comments: 4

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danhodge danhodge said:

They will pull it back in the next quarter. Their tablet is selling very well, so their store will receive a lot more traffic, getting more sales there, and therefore more overall profits - meaning selling the Kindle at such a low price pays off in the long term. I am sure they knew this, and were willing to take losses for one quarter, in order to bring it back much bigger in the future.

tipstir tipstir, TS Ambassador, said:

I've stopping ordering online so I hope that hasn't hurt them too much! Still giving away perks like $10 bucks in MP3 music money. They have to stay in business and do all what they must to keep you interested in buying from them. Example> SONY Network Streamer SMP-N200 was being sold on Amazon directly for $48 back in May 2012 thru Sept 2012. Today that same item is sold for $79 through them.

SNGX1275 SNGX1275, TS Forces Special, said:

I'm sure this is a simple question that I should know the answer to, but how is it a loss when their revenue is up 27 percent? Is a "loss" just a loss compared to expectations or did they actually lose money in there somewhere?

Pan Wah said:

I'm sure this is a simple question that I should know the answer to, but how is it a loss when their revenue is up 27 percent? Is a "loss" just a loss compared to expectations or did they actually lose money in there somewhere?

It baffles me! - the article says it was in the middle of their expectations, I wonder if they made heaps of money but lost it on the horses, or burnt it or something?

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