updated 05:30 pm EDT, Thu October 25, 2012
Loss pinned on economic condition, high 'cloud computing' spending
Amazon reported lower-than-expected quarterly results on Thursday. The e-tailer cites the European debt crisis and recession for reduced consumer demand, and heavy spending on distribution warehouses and cloud-computing data centers for the loss. Prior to this quarter, Amazon had generated 18 straight quarters of gains.
The company said the third-quarter net loss was $274 million, or 60 cents a share, versus net income of $63 million, or 14 cents a share in the third quarter of fiscal year 2011. An impairment charge from Amazon's investment in LivingSocial was assessed this quarter, amplifying the magnitude of the loss. Amazon was expected to lose 8 cents a share in the third quarter with revenue of $13.9 billion. Compounding the loss, Amazon is forecasting next quarter's revenue lower than analysts' estimates.
"There's increased competition from mass merchants and big box retailers embedded in that guidance," said RJ Hottovy, equity analyst at Morningstar. "There's a lot of competition this holiday and it's not clear how this will play out, even for smart operators like Amazon."
Even with the loss, third-quarter revenue was $13.81 billion, up 27 percent from the previous year. Amazon's shares have fallen more than five percent to $211 in after-hours trading following the earnings announcement.