Amazon.com Inc. reported weak quarterly results on Thursday as the world’s largest Internet retailer spent heavily and suffered from an economic slowdown in Europe.
The company said its third-quarter loss was $274-million (U.S.) or 60 cents a share, compared with a profit of $63-million or 14 cents in the third quarter of 2011. Part of the loss was related to an impairment charge from Amazon’s investment in daily deal company LivingSocial.
Seattle-based Amazon said its $199 Kindle Fire HD tablet is its bestselling product worldwide, but as usual, it did not give specific sales figures.
“Our approach is to work hard to charge less. Sell devices near break-even and you can pack a lot of sophisticated hardware into a very low price point,” founder and chief executive officer Jeff Bezos said in a statement.
Amazon has a larger version of the Kindle Fire HD out next month.
Amazon’s results come two days after Apple Inc. introduced a smaller iPad, the Mini, for $329. In its press release announcing the results, Amazon included a list trumpeting its high-definition Kindle Fires as cheaper than the iPad Mini and with more features. However, Apple’s iPad has a much wider selection of third-party apps.
Third-quarter revenue was $13.81-billion, up 27 per cent from a year earlier, Amazon said.
Amazon was expected to lose 8 cents a share in the third quarter on revenue of $13.9-billion, according to Thomson Reuters IBES.
Amazon shares slipped slightly to $221 in after-hours trading after the results.
Before Thursday’s report, Amazon had generated 18 successive quarters of profits, according to BGC Partners.For the crucial fourth-quarter holiday shopping period, Amazon forecast revenue that missed analysts’ expectations. The company also gave a wide forecast for operating profit in the period.
“There’s increased competition from mass merchants and big-box retailers embedded in that guidance,” said R.J. Hottovy, an equity analyst at Morningstar.
“There’s a lot of competition this holiday and it’s not clear how this will play out, even for smart operators like Amazon.”
Amazon said on Thursday that revenue from North America was $7.88-billion, up 25 per cent from a year earlier.
International sales, including Europe, totalled $5.92-billion, up 17 per cent.
Amazon is facing more competition this holiday season from big retailers such as Target and Best Buy, which are planning to match some of the company’s prices online.
Wal-Mart Stores, the world’s largest retailer, is also testing same-day delivery in some cities this holiday, while Target is selling more exclusive products that cannot be bought at lower prices online.
Amazon is also spending heavily on new distribution warehouses and technology to support its cloud-computing businesses, Amazon Web Services. It is also investing hundreds of millions of dollars a year on digital content to sell through its Kindle tablets and e-readers.
Those Kindle gadgets are being sold at cost, pressuring the company’s earnings in the short term. Amazon hopes to make money when customers use them to buy more physical and digital products from the company.
Europe’s sovereign debt crisis and recession is reducing consumer demand, sparking concern that even fast-growing Internet companies may be affected.
EBay chief financial officer Bob Swan said last week that the company expected an “okay” holiday season, partly because of pressure in Europe.
With files from APReport Typo/Error