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Amazon Q2 losses widen, send share price tumbling

Amazon expects to invest nearly half a billion dollars in the next three months, hoping these investments will pay rich dividends.
By Ananth Baliga   |   July 25, 2014 at 11:41 AM   |   Comments

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SEATTLE, July 25 (UPI) -- Amazon reported Friday a second-quarter loss that was double analysts' expectations, as the company uses capital to fund big expansions plans.

The online retailer reported a loss of $126 million, or 27 cents per share, which was worse than the 15 cents per share Wall Street analysts had estimated. While sales saw a handsome bump of 23 percent to $19.3 billion, expenses also jumped by 24 percent to $19.4 billion.

The loss comes at a time when Amazon CEO Jeff Bezos is investing heavily in new products and services, including an unlimited e-book service, grocery delivery, drone technology, and Amazon's first smartphone, Fire, which is set to go on sale Friday.

"We continue working hard on making the Amazon customer experience better and better," Bezos said in a statement.

Shareholders have backed Bezos and his long-term expansion plans but many will want to see results soon, given that Amazon, which is one of America's most-valued companies, has posted losses for two straight quarters.

While share price climbed 59 percent in 2013, it has fallen 10 percent this year as investors express increasing concern about the company's losses.

"We have a tremendous amount of opportunity," said Amazon's Chief Financial Officer Tom Szkutak. While it's affecting short-term results, "we'll obviously be looking to get great returns on invested capital."

Amazon is not very open about its investments, or whether they are reaping any profits for the company, which includes Kindle sales, its Prime program and profits from its online store.

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Topics: Jeff Bezos
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