Amazon’s Profit Falls Far Short

Amazon (NSDQ: AMZN) posted much less profit than expected during the most recent quarter, reporting earnings per share of 44 cents, far short of the 61 cents per share analysts had expected on average and down from the 66 cents per share the company had reported during the same period a year ago. The earnings miss came as Amazon reported a better-than-expected 38 percent increase in sales to $9.86 billion.

Most analysts had expected a smaller drop off in earnings per share during the quarter because of increasing fulfillment and shipping costs. Amazon has also been spending on new digital offerings like Prime Instant Video and Cloud Drive, both of which launched over the last three months. During a call with reporters, CFO Tom Szkutak said that the company was increasing its spending because of its growing sales, citing the need to add capacity to “service that growth.”

As for what’s next for the company’s growing number of digital businesses, executives said little new. Asked about the success so far of Instant Video, Szkutak said Amazon was “very pleased with the adoption so far” but said “it’s very early.” He declined to say anything specific about the company’s strategy for licensing new content for the service, only saying “we will be adding some more content over time.” There have been reports that Amazon is preparing some new push into online advertising, but Szkutak was vague about that too, saying “we’ll have to wait and see what we do further.”

In response to a question about the recent outage of Amazon Web Services, he said he did not have “a lot to add” but did say none of the company’s clients had defected to the competition.

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