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Summary:

Amazon announced Q2 earnings Thursday afternoon, delivering a loss of $7 million in a quarter when its stock hit a record high.

Amazon Package
photo: Flickr / William Christiansen

In a quarter when Amazon’s stock price hit a record high, the company delivered a loss in its earnings report Thursday afternoon even as revenues rose. Earnings were -$0.02 per share, or a loss of $7 million, on revenue of $15.7 billion, compared to earnings of $0.01 per share, or $7 million, on revenue of $12.83 billion this time last year.

Analysts had expected earnings of $0.06 per share on revenues of $15.7 billion.

Amazon’s operating income, which analysts watch closely because they worry about Amazon’s razor-thin margins, fell 26 percent to $79 million. This time last year, it was $107 million.

Amazon’s stock rose to a record $308.69 earlier this month. This wasn’t precipitated by one big event, but July was a good month for Amazon in part because a U.S. federal judge found Apple guilty of conspiring with publishers to fix ebook prices at the launch of the iBookstore. That’s considered a boon for Amazon and its Kindle business. And in the earnings release, Amazon highlighted Kindle: “This past quarter, our top 10 selling items worldwide were all digital products – Kindles, Kindle Fire HDs, accessories and digital content,” CEO Jeff Bezos said in a statement.

Last quarter, we heard rumors that Amazon is working on a set-top box that would stream Prime Instant Video and other video offerings to consumers’ TVs. We’ve seen no sign of that device yet, but in today’s release, Amazon mentioned that “Prime Instant Video has surpassed 40,000 titles, including many premium exclusives like Downton Abbey and Under the Dome.” It also noted that, through a deal with Viacom, “Prime members now have unlimited instant streaming access to popular kids’ titles such as Dora the Explorer and SpongeBob SquarePants” — shows to which Netflix lost the streaming rights.

A few other notes from the report:

  • Amazon launched the Kindle Paperwhite e-reader and Kindle Fire HD tablet in China in June, and said, “Customer response to this launch significantly exceeded expectations and product went out of stock in many retail outlets within the first week.”
  • Amazon noted that Goodreads, the social reading site it acquired in March, doubled its membership in less than a year, to 20 million members. (Goodreads announced this on its blog earlier this week.)
  • My colleague Barb Darrow has more on Amazon’s fast-growing cloud business.

North American media revenues totaled $2.17 billion, up 16 percent over last year, and North American sales of electronics and other merchandise were $6.48 billion, up 31 percent over last year. “Other” sales in North America — which includes AWS — were $844 million for the quarter, up 64 percent.

Internationally, media revenues fell by 1 percent to $2.22 billion — continuing a trend of slow international media sales — while sales of electronics and other merchandise rose 22 percent to $3.94 billion. In reponse to a question about slow media growth in an investor call following the earnings report, CFO Tom Szkutak said most foreign countries are still in the “early stage of conversion from physical to digital” in international media and that Amazon is “excited about the transformation…if you look at our total international business we’ve got a lot of opportunities to invest in.”

For the third quarter, Amazon said investors should expect revenues between $15.45 billion and $17.15 billion, and operating losses between $440 million and $65 million.

Screen shot 2013-07-25 at 4.55.01 PM

This post was updated several times on Thursday afternoon.

  1. What was driving the loss. The build out of more local warehouses?

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  2. Aye yi yi. These guys’ stock has been rewarded for selling dollar bills for ninety cents. Haven’t they had more than enough time to prove their model???

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  3. The death of the brick and mortar bookstore is nigh and upon us.

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  4. The company is continuing to invest heavily in its business. What they have created in Amazon Web Services is oustanding. As a retail and a technology user experience they only accept excellence. They realise that online retail is still in its early days from a global perspective and they are building themselves to be able to exploit that, creating much more shareholder value in the process than trying to increase the margin a little.

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  5. christophermcne Tuesday, July 30, 2013

    I shop almost exclusively on Amazon for every item besides groceries. They are just so very convenient and cheap. I can definitely see retail options dwindling.

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  6. Jordan Malik / JordanMalik.com Inc. Tuesday, July 30, 2013

    It’s not in the story but they get a significant percentage of product sales provided by 3rd party merchants (who fulfill orders themselves or send their merchandise to Amazon’s Fulfillment warehouses).

    - Jordan Malik
    http://JordanMalik.com

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  7. Kindle paperwhite – Official Site – The All-New Kindle
    GOTO:

    Big Savings on Paperwhites 374 reviews for amazon. comTake Your Library Wherever You Go.‎

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  8. Hi Laura,

    It’s too bad about Amazon’s loss. However, they still have a lot of things going on for them. The Kindle has been a popular e-book reader since its development and it has its own pros and cons. A popular feature is the notes and highlights but users have been having difficulty accessing them sometimes on Amazon’s site.

    There is an iOS app called Snippefy (www.snippefy.com) that will be released on November 20123. This app will allow Kindle users to read and share their notes and highlights all in one place. They will also be able to export these to Evernote, Dropbox and Email.

    I thought that I would share this with you and hope you will find it helpful.

    Thank you

    Nathan

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