Feeds

Amazon’s shares slashed as profits drop 73%

Sales OK, but costs through the roof

The essential guide to IT transformation

Amazon’s share price dropped sharply after it reported overall profits have fallen 73 per cent year on year.

The third quarter of the year is traditionally the slowest for retailers, but the company reported that net sales rose 44 per cent from this time last year. However, the company is selling its Kindle hardware at a loss, and has also invested heavily in backend infrastructure this quarter, in particular new warehouses (and air conditioners El Reg hopes.)

Other areas of investment for the company include setting up new Amazon Web Services (AWS) features, such as its virtual private cloud systems and the hardened AWS GovCloud service designed to win federal business. Presumably a fair amount of funds have also been spent strengthening its EC2 backbone after this year’s outages.

However, it is the company’s policy on the Kindle that has Wall Street most worried. Amazon is selling the Kindle Fire at $199, massively undercutting Apple’s iPad. As HP demonstrated with the TouchPad fiasco, there is strong consumer demand for low-cost tablets, but whether Amazon can make enough back in media sales to offset the low purchase price remains to be seen.

"In the three weeks since launch, orders for electronic ink Kindles are double the previous launch,” said Amazon’s CEO Jeff Bezos in a statement. “And based on what we're seeing with Kindle Fire pre-orders, we're increasing capacity and building millions more than we'd already planned."

Looking ahead, the company estimated its operating income next quarter would range between a loss of $200 million and a profit of $250 million, both well below last year’s figures. The fourth quarter is traditionally the strongest for retailers like Amazon, but the company is lowballing estimates of the quarter in advance, suggesting expected profits will not be good.

Next gen security for virtualised datacentres

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Kaspersky backpedals on 'done nothing wrong, nothing to fear' blather
Founder (and internet passport fan) now says privacy is precious
TROLL SLAYER Google grabs $1.3 MEEELLION in patent counter-suit
Chocolate Factory hits back at firm for suing customers
Mozilla's 'Tiles' ads debut in new Firefox nightlies
You can try turning them off and on again
Sit tight, fanbois. Apple's '$400' wearable release slips into early 2015
Sources: time to put in plenty of clock-watching for' iWatch
Facebook to let stalkers unearth buried posts with mobe search
Prepare to HAUNT your pal's back catalogue
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
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.
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.
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.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?