Feeds

Amazon profits take a hit

Lawsuits and tax sap cash

Boost IT visibility and business value

Online retailer Amazon saw profits take a hit in its third quarter, due mainly to a $40m legal settlement.

The company said on Tuesday that third-quarter net income declined to $30m, or $0.07 a share, from $54m, or $0.13 a share, a year earlier. The figures include a $21m income-tax expense as well as a $40m legal settlement related to a patent lawsuit.

Without the settlement payout, Amazon would have reported net income of $50m, or $0.12 a share. Analysts on Wall Street were expecting earnings of about $0.10 a share, according to a survey by Thomson First Call.

The company also said that revenue jumped 27 percent to $1.86bn from $1.46bn. Amazon topped expectations on the Street, where it was predicted that the firm would report revenues of $1.8bn.

Though Amazon's top-line figures were generally good, some analysts were disappointed with the results, which showed no significant improvements in the company's margins - with non-standard operating margins coming in at 6.5 per cent. Recent expansion in the company's selection of products, as well as real-world infrastructure investments, have pushed Amazon's operating costs up almost 50 per cent in the last year, but haven't significantly enhanced Amazon's bottom line.

In other parts of the results, Amazon said that North American sales, which represent the company's US and Canadian sites, grew 28 per cent to $1.04bn for the quarter. Meanwhile, international sales hit $817m, up 26 per cent.

Looking forward, the retailer said it expects fourth-quarter operating income of around USD135 million to USD210 million - a forecast that includes $30m for stock-based compensation and amortisation of intangible assets. For the full year, the company expects sales of $8.37bn to $8.67bn and operating income of $403m to $478m.

Earlier this year, Amazon announced that it would set up a European systems and network operations centre in Dublin. The IDA Ireland-supported operation is to provide infrastructure support for Amazon's systems and networks worldwide. The centre is to create a total of up to 25 new jobs within two years.

Copyright © 2005, ENN

Boost IT visibility and business value

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.