Amazon.com misses Q3 hopes, warns of poor Q4
Lays most of the blame on 11 September attacks
Amazon.com has released lower-than-expected third-quarter results and warned it will do the same again next quarter. It remained upbeat however, saying that it has managed to meet its target of reducing operating costs by 20 per cent and good times are still ahead.
Revenue was barely changed from a year ago, rising just $1.3 million to $639.2 million (£440 million). Analysts were expecting around $650 million. Gross profit (year-on-year) dropped three per cent to $162.2. million. However, thanks to the cost savings, its actual loss more than halved from $163.5 million to $70.3 million.
Amazon put most of the blame of this on the 11 September attacks, claiming they had cost the company between $25 million and $35 million. Maybe, maybe not. But this doesn't prevent the fact that Amazon has reduced its sales growth forecast for the fourth quarter from 10 to 20 per cent to just 10 per cent.
The online retailer saw its core US business in books, music and video drop 12 per cent but this was made up for by a 58 per cent rise in revenues from abroad as the company expands worldwide. Its other goods like electronics etc rose 6 per cent.
At one point Amazon was attempting to sell everything (literally) except the kitchen sink, but ole Jeff Bezos (Amazon's CEO) came to his senses and cut back hugely on the number of lines.
Warren Jenson, Amazon's chief financial officer, wouldn't be drawn on any predictions beyond the next quarter. "We are pleased that our quarterly results were again in line with our guidance, and with our recent order trends,"he said. "We continue to expect pro forma operating profitability for the fourth quarter, and while there are no guarantees, we are well positioned to achieve this important milestone."
Which basically means we're not sure how it's panning out but we're fairly comfortable with it and aren't going to give you any ammunition in case it goes a bit wobbly next year as people find they don't have Christmas bonuses because of the recession. ®