Amazon meets 2Q expectations


Los Angeles - Online retailer on Thursday reported muted second-quarter earnings and projected an operating loss for the current quarter as it absorbs the costs of a warehouse technology acquisition and plans to spend more on order-fulfilment centres ahead of the holidays.

Amazon said its profit was hurt by a $65-million loss related to its acquisition of Kiva Systems, a warehouse technology company that Amazon agreed to buy in March for $775-million in cash. The deal closed on May 1. Amazon is hoping that Kiva's automated systems help boost productivity and improve profitability in the long run.

Share this story on Thursday reported second-quarter earnings that matched Wall Street's meagre expectations, but its revenue gains and outlook for the current quarter fell short of forecasts.

The Seattle-based company said it expects third-quarter revenue to grow between 19 percent and 31 percent from a year ago. That amounts to sales of $12.9-billion to $14.3-billion. The midpoint is short of the $14.1-billion expected by analysts, according to FactSet.

It also forecast a third-quarter operating loss of $50-million to $350-million.

Chief Financial Officer Tom Szkutak said the projected loss was due in part to investment in the company's fulfilment centres ahead of the all-important holiday quarter. It plans to open 18 new fulfilment centres this year and has opened six so far, he said.

After initially falling, Amazon's shares rose $2.63, or 1.2 percent, to $222.64 in extended trading following the release of the results.

Amazon reported net income in the three months to June 30 came to just $7-million, or a penny per share, a drop of 96 percent from $191-million, or 41 cents, a year ago.

That matched analysts' meagre expectations.

Revenue grew 29 percent to $12.83-billion, which was short of the $12.90-billion expected by analysts.

Amazon said that revenue was weighed by currency movements to the tune of $272-million, which the company had forewarned of in April.

Sales of digital goods like Kindle e-books, music and movies rose 13 percent to $4.12-billion, while sales of electronics and other items rose 38 percent to $8.16-billion.

The Kindle Fire, a $199 tablet tailored to handle purchases from, remained the company's top-selling item.

For now, it appears investors are giving the company's lacklustre forecast a pass. Earnings for the fiscal year through December are estimated by analysts to be just $1.17 per share, meaning shares are trading at an eye-popping 190 times earnings.

Apple shares trade at around 13 times earnings while Google shares trade at around 14 times earnings. - Sapa-AP

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