Amazon’s Profits Take a Nosedive
- Posted on October 26, 2011 at 2:33pm by
Becket Adams
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Amazon has been spending and investing in warehouses, data storage facilities and digital-content at an incredible pace. And apparently it’s bringing them financial repercussions.
The online retailer on Tuesday posted a 73 percent drop in third-quarter profit and saw a dramatic decline in its operating margins, reports the Wall Street Journal.
Amazon’s stock also fell by 12 percent in after-hours trading to $198.98 after closing at 4 p.m. at $227.15.
Amazon’s finance chief, Tom Szkutak, defended the company’s spending, claiming that it is necessary to “keep pace with its strong growth.”
“We’re investing in a lot of capacity,” including on shipment centers and capacity for cloud storage business and supporting content such as video streaming, Mr. Szkutak said in the Journal report.
And despite the posted loss, it’s not all bad. Net sales are up to $10.88 billion from $7.56 billion a year ago, writes Newer.
Szkutak is keeping his chin up, predicting that Amazon’s investments will pay off: “Once customers purchase a Kindle and are carrying around this really massive selection at their fingertips, they’re buying more content.”
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piper60
Posted on October 27, 2011 at 8:31amAmazon is a good strong company. They do have to be careful that their spending doesn’t eventually outstrip their intake.
Report Post »williamsteaparty
Posted on October 29, 2011 at 12:43pmAs a business owner I understand what they are doing. They are buying up real estate while it is cheap, and have it ready when however it happens the market resets and they are ready for the demand. Smart companies do the most growing during a recesion. I will pay off it is for our company too.
Report Post »The_Eye
Posted on October 26, 2011 at 8:26pmI wouldn’t be worried about any of this. If anything it is a good time to buy Amazon stock if it took a dip. They are a solid performer and a great retailer with GREAT prices and I‘m sure they’ll keep cranking out merch to people all around the world.
Report Post »orionreplay6607
Posted on October 26, 2011 at 8:17pmLong live Amazon. Prime member since 2005.
Report Post »Flyinglow6
Posted on October 26, 2011 at 7:27pmJust bought two kindle Fire products yesterday. Hopefully we want be sorry. Never a dull moment.
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