Feeds

Amazon’s shares slashed as profits drop 73%

Sales OK, but costs through the roof

Internet Security Threat Report 2014

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.

Beginner's guide to SSL certificates

More from The Register

next story
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Spies, avert eyes! Tim Berners-Lee demands a UK digital bill of rights
Lobbies tetchy MPs 'to end indiscriminate online surveillance'
How the FLAC do I tell MP3s from lossless audio?
Can you hear the difference? Can anyone?
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
prev story

Whitepapers

A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
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?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.