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Amazon sales up 22% in Q2 but surprise loss sends stock reeling

The company's revenue was on the money, but an unexpected quarterly loss and disappointing Q3 guidance cause stocks to tumble in after-hours trading.

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Amazon on Thursday reported a net loss of $7 million, or 2 cents a share, on $15.7 billion in revenue for its second quarter. The company's sales figure, up 22 percent from the year-earlier quarter, was on target, but analysts had expected a 5 cents-per-share profit.

Also, Amazon said that it anticipates third-quarter revenue between $15.45 billion and $17.15 billion, which falls short of the consensus for $17 billion. At the same time, Amazon projected a net loss for the quarter.

Wall Street does not like these sorts of surprises and the knee-jerk reaction was to head for the exits. The stock was off more than 2 percent in after-hours trading. Earlier Amazon's stock finished up nearly 1.5 percent to close at $303.40 during the regular trading session.

The company did not immediately address the loss. In a prepared statement, CEO Jeff Bezos said:

We're so grateful to our customers for their response to Kindle devices and our digital ecosystem. This past quarter, our top 10 selling items worldwide were all digital products - Kindles, Kindle Fire HDs, accessories and digital content.
Amazon CEO Jeff Bezos
Amazon CEO Jeff Bezos David McNew/Getty Images

In quarters past, Amazon would report earnings that disappointed Wall Street, which wanted to see bigger profits. But Bezos, true to the strategy he has followed from Amazon's inception, follows his own counsel when it comes to the company's spending strategy. Over the years, Amazon has invested heavily in building out its infrastructure, confident in its ability to generate sales as it expands into new markets. Profits? They'll follow -- someday. And despite the sotto voce grumbling, most analysts have bought into that argument. Indeed, Amazon's stock is up about 20 percent for the year.

Unfortunately, the conference call held by Amazon to discuss its second-quarter earnings wasn't very enlightening. Amazon did not break out any details on its Kindle line of tablet computers or Amazon Web Service. Neither did it get granular about its other businesses.

CFO Tom Szkutak was variously "optimistic" and "excited" about the myriad parts of Amazon's business and its near-term prospects. But this is how Amazon's quarterly earnings calls go. True to form, Szkutak, doing an MBA version of Ali's Rope-a-Dope, deftly turned aside any questions which had more oomph behind them than a lazy summer softball.

Amazon Q2 2013 Financial Results

Update, 2:50 p.m. PT: Adds analysis and information.