Amazon reports loss on revenues of $15.7B; highlights Kindle success

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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.

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This post was updated several times on Thursday afternoon.

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