Amazon shares took a huge hit on Tuesday when the online retail giant announced a 73% drop in profits for Q3 2011.
According to the company profits declined to $60.4 million as the organization invested heavily in the Kindle Fire, digital content and infrastructure projects needed to position the company for future growth.
Amazon also announced increase revenues of $10.35 billion (14 cents per share), well below analysts expectations of $10.5 billion (24 cents per share).
During the current quarter Amazon executives expect revenue of $15.77 billion to $17.88 billion.
Speaking about his company’s strategy CEO and Founder Jeff Bezos said :
“September 28 was the biggest order day ever for Kindle, even bigger than previous holiday peak days.”
“In the three weeks since launch, orders for electronic ink Kindles are double the previous launch.
“And based on what we’re seeing with Kindle Fire pre-orders, we’re increasing capacity and building millions more than we’d already planned.”
With black Friday just around the corner it will be interesting to see how far out of the black Amazon can climb after huge spending.
In the meantime the company continues to look for ways to develop further profit streams, including plans to launch their own content development sector which will cut many book publishers out of the equation.
Do you think it was smart for Amazon to invest so heavily in technology and infrastructure over a single quarter of spending?