Amazon reports larger than expected Q3 losses

Amazon made a loss in its third quarter as the company invested heavily in new technology and its distribution centres and was dragged down by an impairment charge on its stake in daily deals site LivingSocial.com.

The online retail giant reported a loss of $274 million for the period July to September compared to net income of $63 million in the same three months in 2011. The results included a loss of 37 cents per share related to Amazon's minority stake in LivingSocial.

Although net sales increased by 27% to $13.81 billion compared with $10.88 billion in the third quarter 2011, the figure fell short of analysts’ expectations.

Chief financial officer Tom Szkutak also attributed the loss to increased investment in overseas expansion and the development of the company's Kindle e-readers and tablets. In addition, Amazon is opening 19 distribution centres across the US in the run-up to Christmas and is hiring 50,000 temporary workers.

Amazon.com said its Kindle Fire HD tablet was its best-selling product worldwide. The company is due to launch a larger version of the tablet next month.

"Our approach is to work hard to charge less," said Jeff Bezos, founder and CEO of Amazon.com. "Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point."

For the current quarter, Amazon has predicted that its operating income will range from a profit of $310 million and a loss of $490 million with revenue expected to be between $20.25 billion and $22.75 billion.

Source : Retail Bulletin
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