SAN FRANCISCO (Reuters) - Amazon.com
Inc posted a much larger-than-expected loss in the second quarter as
it continues its rapid pace of investment in new businesses such as
digital content and consumer electronics.
Amazon's stock price has dropped 10 percent so far in 2014, with
investors leery of betting on its long-term growth at the expense of
little to no profit.
On Thursday, the shares fell another 10 percent in late trade, after
the largest U.S. online retailer posted a loss of 27 cents per
share, nearly double Wall Street's average estimate for a loss of 15
cents.
The company also forecast an operating loss of between $810 million
and $410 million for the third quarter ending in September, a sharp
increase from a loss of $25 million a year earlier.
Amazon is investing heavily in new businesses and hardware products,
as it prepares to take on major tech rivals from Apple Inc and
Google Inc to Netflix.
Chief Financial Officer Tom Szkutak said Amazon had a "tremendous
amount of opportunities" and its investments were "certainly
impacting short-term results."
The company is spending more than $100 million on original video
content in the third quarter, a substantial increase compared to
last year and the second quarter, Szkutak said.
"We're going to continue to invest on behalf of customers with the
understanding that long-term has to come," he said during a call
with reporters. "We'll obviously be looking to get great returns on
investor capital and high amounts of cash flow.
New products and businesses unveiled this year include a
subscription book service, new digital content for its Prime online
video service, a TV streaming-box and the upcoming "Fire" smartphone.
Amazon is also spending billions of dollars expanding its network of
fulfillment centers across the world.
Amazon reported a net loss of $126 million, or 27 cents per share in
the second quarter, compared to a loss of $7 million, or 2 cents a
share a year earlier. Total operating expenses rose 24 percent to
$19.36 billion.
Revenue jumped 23 percent to $19.34 billion, in line with Wall
Street's average prediction of $19.3 billion, according to Thomson
Reuters I/B/E/S.
Amazon's steep price cuts for its cloud computing service made
earlier this year limited growth in its "Other" revenue category,
which includes its popular Amazon Web Services division, Szkutak
told reporters.
The company's stock fell to $323 in extended trade, down from a
close of $358.61 on the Nasdaq.
(Reporting by Deepa Seetharaman; Editing by Bernard Orr)
