Friday October 26, 2012
Amazon swings to loss on higher costs, writeoffs
NEW YORK: Amazon on Thursday said it swung to a loss in the third quarter, as the Internet retail titan was hit by higher operating costs and a big writeoff, in results sharply below Wall Street expectations.
Amazon reported a loss of $274 million in the quarter, compared with a profit of $63 million in the same period a year ago.
Excluding special items, the loss amounted to 23 cents a share, worse than forecasts of a loss of eight cents per share.
Revenues in the period rose 27 percent to $13.8 billion, but fell short of analyst forecasts of $13.9 billion.
The disappointing results showed a sharp rise in operating expenses including cost of sales, marketing and technology.
Amazon also reported a writedown of $169 million for its stake in online deals group LivingSocial, under accounting rules requiring a charge against earnings to reflect the lower estimated value of the company.
Amazon shares fell 3.8 percent in after-hours trade after losing 2.4 percent in regular trading.
Founder and chief executive Jeff Bezos said Amazon remained committed to delivering value to customers through its retail marketplace, digital content and its Kindle tablets.
"Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point," said Bezos.
"And our approach is working - the $199 Kindle Fire HD is the number one bestselling product across Amazon worldwide. Incredibly, this is true even as measured by unit sales."
Amazon has ramped up its efforts in the tablet segment, as part of a move to keep customers in the company's orbit for e-books, music and other digital content, challenging the iPad from sector leader Apple.
Amazon maintained that its new large-format Kindle Fire HD aimed at competing with the large iPad "has 193 percent more pixels" and better audio and costs less than the iPad.
The company said the seven-inch Kindle Fire HD has similar advantages over the iPad mini unveiled this week by Apple. - AFP