Amazon's profit disappoints, thanks to Apple's iPad success
Current quarter not so sanguine, either
Amazon reported disappointing second-quarter profit on Thursday, as competition from Apple, weakening European currencies and shrinking consumer spending ate into the company's bottom line. Shares tumbled 15 percent following the announcement.
CEO Jeff Bezos said sales for its Kindle e-book reader were accelerating, but they still took a beating from Apple's iPad, which went on sale in April. Earlier this week, Apple said it has sold 3.27 million iPads since the debut, and an analyst recently forecast Cupertino to ship 12.9 million of the devices by the end of the year. Apple's success has forced Amazon to cut the price of the Kindle to $189.
Net income for the quarter grew 45 percent to $207m, or 45 cents a share, well below the 54 cents analysts had projected. Amazon said operating profit in the current quarter would be between $210m and $310m, which was also much less than Wall Street had been expecting. Sales grew 41 percent to $6.57bln.
Sales of electronics and general merchandise grew by 69 percent, and revenue from books and other media rose 18 percent.
In addition to warding off Apple, Amazon is also coping with unfavorable currencies from overseas, where the US company does the majority of its business. Add nervous consumers to the mix, and it's fair to say prospects over the next few quarters could be tough for the e-commerce company. ®