Amazon Shares Miss Earnings Forecast, Stock Sinks

SEATTLE (The Seattle Times/MCT) -

Amazon.com posted a much larger loss than analysts expected for the third quarter on Thursday afternoon, and the company’s shares sank in trading Friday morning.

What’s more, the company’s guidance for the all-important fourth quarter, which includes the year-end shopping season, is below many analyst estimates.

For the quarter, Amazon lost $437 million, or 95 cents a share, compared to a $41 million loss, or 9 cents a share, in the third quarter of 2013. Revenue climbed 20 percent to $20.58 billion.

Analysts had expected the company to lose 74 cents a share on revenue of $20.85 billion.

For years, Amazon investors have been willing to accept thin profit margins and even losses as the company invested in new businesses. But they’ve increasingly become dissatisfied with the company’s red ink, and they battered the company’s shares in trading Friday morning.

Early in the trading session Friday, Amazon shares had dropped $22.58, or 7.2 percent, to $290.60.

Amazon said it expects to generate between $27.3 billion and $30.3 billion in revenue in the fourth quarter. Cantor Fitzgerald analyst Youssef Squali had projected the company would ring up $30.78 billion in fourth-quarter sales.

The company also said operating income for its fourth quarter would fall between a $570 million loss and a $430 million profit. Squali had forecast $483 million in operating profits.

Fueling the third-quarter loss was a nearly 40 percent jump in technology and content operating expenses, to $2.4 billion.

Amazon has been plowing money into expanding Amazon Web Services; it just opened a massive new data center in Germany Thursday. It has spent lavishly to both buy and produce programming for its Prime Instant Video service. And it recently expanded its AmazonFresh grocery-delivery service to New York City.

“We’ve been investing in a lot of areas across the company,” Amazon Chief Financial Officer Tom Szkutak said in a conference call with journalists after the company released the results. “We do have a lot of opportunities in front of us; but we do have to be selective on those opportunities.”