NEWS

Amazon reports $126m quarterly loss

Published on: 25th July 2014

Amazon has reported a loss of $126m (£74m) in the second quarter and warned that sales could slow in the current quarter. Amazon-logo300

It forecast third quarter sales of between $19.7bn and $21.5bn, which could mean sales growth of as little as 15% – well down on previous quarters.

Amazon has traditionally survived on thin profit margins, but investors have been reassured by strong sales growth.

Amazon has been investing heavily to build up its business including the launch last month of its first smartphone, the Fire Phone. It has also been developing digital content including computer games and TV shows.

Amazon has also been spending money on improving its delivery systems which includes expanding Sunday delivery to 18 cities in the United States. Another major cost of Amazon has been the building of its Amazon Web Services business. It provides computer services and storage for businesses and has been growing very quickly.

To match that growth Amazon has been investing heavily in infrastructure and has hired “thousands” of staff for the web services operation.

All that has contributed to a negative net income of $126m in the second quarter, which compares with a loss of $7m in the same quarter in 2013.

That loss came despite a 23% jump in second quarter sales to $19.3bn.

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