Amazon Earnings Fall Short of Expectations

Jacob Harper | Inc (AMZN) is pretty used to not posting terrific earnings, missing analyst expectations three out of the last four quarters. The second quarter of 2013 made it four of five. The company increased revenues 22 percent but still fell well short of income expectations, actually losing money on the quarter.

While the company has continued to find success with their e-reader Amazon Kindle, spending was still too high to keep the company in the black for the quarter.

Analysts had been expecting a profit of around 28.3 million, and Amazon fell well short of that.

The Seattle, Wa. Company has expanded out from its retail operation to joining the content distribution business, battling Netflix Inc. (NFLX) in the content streaming game. Amazon, like Netlfix, has also started venturing into producing online content, as the internet companies take on traditional television outlets.

Amazon has remained aggressive in expanding the scope of their business past retail. Near the end of Q1 2013, they purchased popular book-club site Goodreads, which has 20 million members. Amazon has also ventured into cloud computing, which has accounted for a sizable increase in Amazon’s profit margins.

According to analyst Jason Hoffman, CTO of Joyent, once infrastructure is in place the profit margin of cloud computing can approach 40 to 50 percent, whereas Amazon’s retail outfit returns around 4 percent.

Despite renewed diversification, the company still couldn’t post a profit this quarter. Amazon reported net loss of $7 million, or a loss of $0.02 a share, versus the $7 million net income, or $0.01 per share, from the same period a year ago. Revenue for the quarter was $15.7 billion, as compared to $12.83 billion from the previous year. Analysts were expecting a profit of $0.05 per share on revenues of $15.73 billion.

Amazon’s stock, up a percent and a half on the day, shot down after the earnings report. It’s now down 2.02 percent to hit $297.27.

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Symbol Name Price Change % Volume
AMZN Inc. 822.59 -12.59 -1.51 3,999,112
KLTI Klaustech Inc 0.10 0.00 0.00 0
NFLX Netflix Inc. 126.97 0.46 0.36 8,602,407