Amazon shocks with net loss for quarter

Amazon may be one of the biggest retailers in the world, but it has surprised investors with an overall net loss for the second-quarter of 2013. A total loss of $0.02 per share has been responsible for a loss of $7 million in total.

The money 'lost' by the company has been invested into warehouses and improving digital content, so it may increase sales growth overall (i.e. lose now, profit later). Amazon's digital content includes MP3s, eBooks and games, so the company can justify the costs.

The amount of money spent on the company itself has increased operating costs by 23% over the last quarter, which is rather a large sum of money.

Customers probably won't notice a difference, and if they do it's likely to be positive: more warehouses means more stock. Jeff Bezos has also stated that "profits are not important to Amazon, customers are", and he's proving it.

Even so, some analysts aren't convinced Amazon's spending is a wise move. Colin Gillis of BGC Partners in New York, feels the retail giant needs to “prove it can sell goods and services” for a profit, to justify its market capitalization.

Analysis had previously suggested profits of $20 million or more for the quarter.

Source: Bloomberg | Image via Shutterstock

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Also, in case you haven't noticed, Amazon has not exactly put on the brakes when it comes to their prices (especially outside their Kindle divisions); our family has bought two Tivo Premieres from Amazon because not only do they charge less than Tivo itself, but shipping is both lickety split (two days) and free.

Amazon posts a loss and stock goes up. Microsoft posts 6 Billion in profit with a 900M right down and the stock goes down. Makes 0 sense to me.

Because Amazon are showing strong growth and the loss incurred was through investments that will increase future revenue/profit whereas Microsoft are in apparent decline thanks to falling PC sales and very poor performance of their Tablets. Stock price is a lot more reflection of expected future performance than current performance

Its all to do with expectation of the company and whether it was expected!

Different investors invest in different company things for different reasons, fast return, long term, because they fan of company the list almost endless.

Can't imagine too many people would be upset about a company spending money to do what they feel will ultimately help their customers. Obviously their stock price today reflects the overall reaction to lost profit, but a company bettering (no Idea if I used that right) itself in the long run.

I think there are a lot of other large companies out there that are still making huge profits but still seeing their stock prices decline. Mainly because (I think) customers only see a profit being made off of their business and not seeing much in return. The message that says "We're spending this morning for YOU" always has a better response than "We're making money."

CygnusOrion said,
Amazon is quite the charity, not something stock investors are into.

Dunno from what i understand it's an investment they did to upgrade the infrastructures to be able to profit more later. If it's the case i think it's something investors will understand. Could be wrong though.

you know what investors think then they hear "profits are not important to Amazon, customers are"? FIRE HIM!!! HE'S THE DEVIL!!!!!!!!

Lord Method Man said,
Why would the investors be upset? The stock is up following this news.

it was a joke..... usually all investors want is profits profits profits, Bezos said profits are not important.... hence investors want to kill.... oh never mind why am I even explaining a joke...

Amazon lost money for years and years, they only turned a profit recently. I'd assume this is more of the same and wouldn't worry...they're definitely not going anywhere.

siah1214 said,
Amazon lost money for years and years, they only turned a profit recently. I'd assume this is more of the same and wouldn't worry...they're definitely not going anywhere.

exactly, nobody can beat their prices. every store has lots of expenses, electricity, labor, .... but they don't pay for those. I am sure next quarter they would have double profit.

Spicoli said,
That's because the loss was due to spending on new capacity which (should) mean better revenue.

Yep, revenue had a really good growth, and that's really what investors care about.

Astra.Xtreme said,
The interesting part is that their stock price is actually up today (so far).

They are doing some major expansion in India as they have just launched amazon.in last month. I can't imagine how much they must've paid in land acquisition and construction here.

COKid said,
The taxes they may charge customers would go to tax agencies. Your comment makes no sense.

Taxes mean people would have no additional advantage in some cases to buying the item online and will go to their local store to purchase to have in hand the same day. The comment makes perfect sense. But that's not why, it clearly states in the story why they took a loss.

Makes perfect sense, when you could get stuff much cheaper, without paying friggin tax.

It does not matter who pockets the extra money.

It is going to discourage ordering from Amazon.