Saturday, July 26, 2014

Amazon Loses More Money Than Expected; Stock Suffers

Publishers Lunch

Amazon's stock is down over 10 percent in early Friday trading (a decline of almost $40 a share) after reporting a larger than expected loss for their second quarter -- and forecasting bigger losses for the next quarter. Second quarter sales grew 23 percent to $19.34 billion, with an operating loss of $15 million, and a net loss of $126 million, or 27 cents a share. Sales were right on target with analysts' estimates, but the loss was bigger than the consensus guess of 15 cents a share. That earnings miss plus third quarter guidance of a big operating loss of anywhere between $410 million and $810 million (compared to a $25 million loss in the same quarter a year ago) has once again spooked investors.

Amazon as a company continues to lose money for its shareholders, but by all accounts their employees continue to do just fine with company stock. Stock-based compensation and amortization of intangible assets accounted for $391 million in the just-reported quarter, and is expected to comprise $410 in the third quarter.

In Thursday's report, North American media sales of $2.46 billion were up 13 percent compared to a year ago, and international media sales of $2.38 billion grew 7 percent. In the investor conference call, cfo Tom Szkutak said in answer to a question: "In terms of Kindle Unlimited, it's very early, but we're extremely pleased with what we see. There's been a great reaction to it. And we're pleased to offer that to customers."


The Kindle Fire phone officially releases today.

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