Amazon Results Report First Loss Since 2003

Amazon reported its first quarterly net loss since 2003 in its latest set of results.

The online retailer and cloud giant said its loss in the third quarter amounted to $274 million (£170m), even though revenue was up 27 percent from last year to $13.81 billion (£8.6m).

A number of reasons have been given for the loss, such as the economic slowdown in Europe, increased competition from physical retailers and investments in Amazon Web Services (AWS) and its digital content platform. Amazon also attributed the loss partly to losses sustained by LivingSocial, its daily deals service.

The company’s forecast for the fourth quarter also fell short of analysts’ expectations as the company gave a wide forecast for operating income.

Amazon results fall short

Amazon spent heavily on new distribution warehouses as well as technology for AWS. It spent $1.51 billion in the quarter on shipping and warehouses as technology and content spending rose by $769 million from last year to $1.19 billion.

However, the investment wasn’t enough to prevent problems at its data centre in Northern Virginia taking out a number of websites, including Reddit, foursquare and Pinterest, earlier this week.

It has also invested in digital content for its range of Kindle e-readers and tablets. Amazon expects to make no profit on the Amazon Kindle Fire HD and instead hopes to recoup the costs by selling more books, films and applications to users.

“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 Jeff Bezos, CEO of Amazon. “And our approach is working – the Kindle Fire HD is the number one best-selling product across Amazon worldwide.”

The Amazon Kindle Fire HD was released in the UK yesterday, along with the Kindle Paperwhite, the latest version of its popular e-reader.

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