Amazon loses $274 million in Q3, shares plummet

Shares of Internet retailer dive more than 5 percent in after-hours trading after big quarterly miss and warning of Q4 operating loss.

Update: 4 p.m. PT Even for Amazon, this was the sort of news that won't go down well on Wall Street.

Amazon lost $274 million, or 60 cents a share in the third quarter ended September 30 on $13.81 billion in sales. Wall Street's consensus estimates were for an 8 cent-per-share loss on $13.92 billion in quarterly revenue, according to First Call. During the year-earlier period, Amazon earned $63 million, or 14 cents a share, on $10.9 billion in sales.

The quarter included a $169 million loss related to Amazon's daily deals business, LivingSocial.

This was Amazon's second consecutive quarterly disappointment after beating forecasts in the prior two quarters. Following the release of the results, shares of Amazon tumbled more than 5 percent in after-hours trading.

Investors may also have been spooked by the company's guidance for the fourth quarter. Amazon said that it expects anywhere between a $490 million loss and a $310 million profit on sales between $20.25 billion and $22.75 billion.

Amazon's earnings conference call is scheduled for 2 p.m. PT today.

"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 Amazon Jeff Bezos in a prepared statement.

  • North America sales, including revenue from Amazon Web Services: $7.88 billion, up 33 percent
  • International: $5.92 billion, up 20 percent
  • Worldwide Media sales: Up 11 percent to $4.60 billion.
  • Worldwide Electronics and Other General Merchandise sales: Up 36 percent to $8.56 billion

The world's largest online retailer's spending strategy is likely to invite scrutiny on the conference call. For years, Bezos has demonstrated a preference for plowing resources into initiatives to build market share which take years to generate profits. But that seeming indifference to near-term profits drives Wall Street batty. Bezos is not backing down. In fact, he recently told the BBC that Amazon's selling the Kindle Fire HD and Paperwhite e-reader at cost.

Amazon's stock, which started the year just above $175 a share, has been one of tech's strongest performers. The stock closed today at $227.55.

Net income (loss) Amazon.com
Nodding to current events -- the release of new tablet computers from Apple and Microsoft -- Bezos also played up Amazon's tablet offerings. He said that the $199 Kindle Fire HD is the company's best-selling product. "Incredibly, this is true even as measured by unit sales. The next two bestselling products worldwide are our Kindle Paperwhite and our $69 Kindle," he added. "We're selling more of each of these devices than the No. 4 bestselling product, book three of the "Fifty Shades of Grey" series. And we haven't even started shipping our best tablet -- the $299 Kindle Fire HD 8.9" ships November 20."

  Correction: An earlier version of this post misstated the possible operating loss Amazon included with its fourth-quarter guidance. Amazon said that it expects anywhere between a $490 million loss and a $310 million profit on sales between $20.25 billion and $22.75 billion.

 

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