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Amazon: stack 'em high, sell 'em low, lose money

Amazon Kindle Fire

By Barry Collins

Posted on 26 Jul 2013 at 07:44

Amazon has announced a quarterly loss of $7m, despite a huge boost in revenue.

The monolithic online retailer saw revenue climb to $15.7bn for the quarter, an increase of 22% on the same quarter last year. But investment in new fulfilment centres and acquiring digital rights saw the company once again dip into the red.

Amazon has never delivered huge profit margins. This time last year the company only posted a slim profit of $7m on revenue of $12.7bn. The company spent much of its early life making heavy losses as it focused on expanding its range at the expense of short-term profits.

But with the company now closing in on its 20th birthday, investors' patience may begin to wear thin if profit margins don't begin to show signs of improvement. The company's stock fell by almost 2% in after-hours trading after the results were announced.

Amazon CEO Jeff Bezos made no reference to the loss in a statement accompanying the earnings, instead focusing on the new revenue streams the company is developing.

"We’re so grateful to our customers for their response to Kindle devices and our digital ecosystem," Bezos said. "This past quarter, our top 10 selling items worldwide were all digital products – Kindles, Kindle Fire HDs, accessories and digital content."

That digital content will soon include Amazon's own roster of television shows, as it attempts to take on rivals such as Netflix. The company has five full series in the works, including two comedy programmes and three children's shows. They will be shown exclusively on Amazon Prime Instant Video next year.

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User comments

so...

Amazon is investing heavily in its infrastructure to support its juggernaut growth and position its own products as market leaders so that it can then maximise the impact in future years.

By Bunnyman on 26 Jul 2013

Smoke & Mirrors

Paper loss for tax purposes

By incognitii on 26 Jul 2013

They've never given out dividends for ordinary shares. I presume that investors are rewarded by a higher share price but when share prices plateau they'll have to start paying out. Until then it's best to re-invest otherwise shareholders will start clamouring for some of the profits.

By Mark_Thompson on 26 Jul 2013

Que?

This article seems to have been written by someone who has no understanding of investment finance.

By qpw3141 on 26 Jul 2013

@qpw3141
Could you expand? I see the logic of not paying dividends while the share price continues to rise sharply - share holders are still seeing a return (of a kind) on their investment... but after 20 years, and revenues of $15.7bn one would kind of expect a high share price and generous dividends....

By Mark_Thompson on 26 Jul 2013

They just can't win

Apple made huge profits and escaped censure for not paying tax. Amazon makes tiny profits and gets pilloried both for low profits and for its tax payments.

By tirons1 on 28 Jul 2013

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