Amazons Third Quarter Profits Down By 73%
Amazon.com (NASDAQ:AMZN), the E-commerce giant on Tuesday announced its third fiscal quarter earnings, in which it posted a 73 percent drop in profit.
The company missed estimates of Wall Street analysts, sending stocks 17 percent down in post market trading. The E-commerce company earned $63 million in the recent quarter, showing a decline of about 73 percent over the same quarter a year ago. As per analyst forecast, the pre share earnings fell short by 14 cents per share.
Amazon’s sales on the third quarter that ended September 30th came in at $10.9 billion, which was close to analysts forecast. Tom Szkutak, chief financial officer at Amazon, in the post earnings conference call said, spending on expansion led to earnings decline. Amazon is talking about investing in a lot of capacity over the past few quarters.
Mr. Szkutak said, the E-commerce company is planning to start 17 new warehouses, the group is also shedding out money in other sectors such as the new Kindle line, Amazon’s web hosting and digital content business, to compete against the Apple tablets.
In its earnings report the company focused mainly on the last months unveiling of the Kindle tablets that will succeed the highly successful Kindle e book readers. Amazon did not specify the exact number of the tablet Kindle fire sold, beyond saying that the company is manufacturing millions of more tablets that it had initially planned. The Kindle fire will compete against Apple’s IPad 2.
Amazons sales of electronics and other general products, where the Kindle tablet is categorized under, rose by 59 percent compared to the previous year, attaining around $6.3 billion. The fourth fiscal quarter figures are forecasted somewhere between $200 million loss and $350 million gain. However, the company is expecting this year’s fourth quarter income to drop compared to $474 million of last year’s fourth fiscal quarter earnings. The net sales of the company are expected to be between $16.45 billion to $18.65 billion. A range of $16.88 billion to $19.2 billion is being projected by Wall Street analysts.
The profits of Amazon were squeezed by the escalating competition faced from Apple Inc. The pursuit to overtake Apple has led to Amazon losing as much as $11 billon from the market value of the company. Amazon is competing against Apple in the areas of book sales, tablet computers, movies and digital songs. Amazon has prices the Kindle Fire tablet around $199. The company will lose $10 per every device sold. However doing so, Amazon will beat Apple in terms of cost.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht. |
