Amazon Still The Same: No Profits For You!
Amazon reported earnings today, and continued to annoy investors by not delivering profits yet again. In fact it delivered a quarterly loss of $126MM. Disgruntle investors now join pissed off writers - very public conflict with the publisher Hachette - and scared electronics retailers - nobody else can operate indefinitely on 1% margins.
Skepticism grew to new levels and stock dropped about 10% after hours. It's a remarkable accomplishment to have $20 billion in revenue and not turn a profit at all, as I was discussing a few months back. Amazon continues to repeat their well known mantra "we are not optimizing for short-term profits". Amazon remains confident yet a little vague as to when they expect to revert the trend. They cite a wide range of reasons for the losses: tons of near hires, 6 new warehouses, several new product launches (their phone, the subscription service to unlimited ebooks, tons of new content to put on their Kindles...)
In any event, their shares have been under significant pressure this year, at one point being as far down as 25%, and by the looks of they will continue to be. The forecast for Q3 is an even larger loss. New products and services, along with a healthy growth in revenues (20%+) continue to hold the giant together, but maybe Amazon should change the way it thinks about its problem of trying to become profitable.
Disclaimer: my company, Next Jump, owns and operates a shopping marketplace for employees - CorporatePerks - that indirectly competes with Amazon.
