Amazon Posts First Quarterly Loss In Four Years
Amazon on Thursday posted its quarterly financials, and, for the first time in four years, the company lost money.
The online retail giant blamed its woes in part on the European debit crisis and following recession. Buyers in Europe have caused a reduction in consumer demand.
Amazon profits were also hurt because of heavy spending on new distribution warehouses and the company’s cloud-computing data centers.
Before the most recent quarter, Amazon managed 18 quarters in a row of gains.
Amazon lost $274 million in Q3 2012, an amount equal to 60 cents per share. In comparison, Amazon earned a net income of $63 million in the same quarter of 2011. Amazon was only expected to lose 8 centers per share in Q3 on revenue of $13.9 billion.
The online retail giant also claimed an impairment charge from its investment in LivingSocial. The social shopping platform generated approximately $124 million in third-quarter revenue with operating expenses nearing $193 million.
According to Morningstar equity analysts RJ Hottovy:
“There’s increased competition from mass merchants and big box retailers embedded in that guidance. There’s a lot of competition this holiday and it’s not clear how this will play out, even for smart operators like Amazon.”
Despite its losses, Amazon still managed to rack up $13.81 billion in total sales, an increase of 27 percent year-over-year.
Amazon shares slid by five percent to $211 in after-hours trading after the earnings announcement was made.
With the holiday shopping season upon us, it is likely Amazon’s net returns will increase, even as the company is playing its forecasting with bearish expectations.