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Amazon posts mixed Q2 results, disappointing Q3 outlook

Amazon projects third quarter operating loss, but touted its Amazon Prime subscription service. Second quarter results were mixed.

Larry Dignan
2 min read

Amazon's second quarter results were mixed and the third quarter outlook disappointed.

The e-commerce giant reported second quarter earnings of $7 million, or a penny a share, on revenue of $12.83 billion, up 29 percent from a year ago.

Wall Street was looking for earnings of 2 cents a share on revenue of $12.88 billion. Amazon's revenue clearly fell short of expectations, but the earnings results for the second quarter were more debatable. Amazon said that the second quarter earnings included a loss of $65 million related to the integration of Kiva Systems, which was recently acquired.

If you back out those integration costs, Amazon's profit would have been $72 million, which was better than net income of $20.8 million projected by analysts.

The third quarter outlook, however, clearly was off the mark for Amazon. The company projected and operating loss for the third quarter between $350 million and $50 million. Wall Street was looking for an operating profit of $164 million.

Amazon also said its sales for the third quarter would be $12.9 billion to $14.3 billion. Wall Street was expecting $14.09 billion.

With those moving parts it's no surprise that investors weren't quite sure what to make of Amazon's results. After-hours trading in Amazon was indecisive.

In a statement, Amazon CEO Jeff Bezos talked up Amazon Prime and as the "best bargain in the history of shopping."

By the numbers:
• North America accounted for 57 percent of sales. International sales were 43 percent of revenue.
• The international unit delivered a second quarter operating profit of $16 million. And North America had operating income of $344 million.
• Other second quarter revenue, led by Amazon Web Services, was $554 million, up from $359 million a year ago. Other also had the fastest revenue growth in North America with growth of 58 percent.
• Inventories were $4.38 billion as of June 30, down from $4.99 billion on December 31.
• Amazon spent $657 million on assets such as Website development and software.

This story was first published as "Amazon forecasts Q3 operating loss; Q2 mixed" at ZDNet's Between the Lines.