Amazon reported a net loss of $126 million or 27 cents per share for the June, 2014 quarter end on sales of $19.34 billion. Analysts expected Amazon to see some red this quarter, but the forecast called for a loss of about 15 cents per share. Amazon badly missed Wall Street expectations and it has some investors alarmed and confused.
As for the cause of the loss, some point to the Amazon Fire Phone and Fire TV and the financial challenges surrounding them. Others say the problem is Amazon.com CEO Jeff Bezos and his often lackadaisical attitude toward profits. After all, sales were in line with expectations and were significantly improved compared to the same quarter of last year. Everything looked good except the bottom line and investors feel that Bezos isn’t doing enough to explain the difference.
Bezos was quick to emphasize the focus on customer service and new products. "We continue working hard on making the Amazon customer experience better and better," said Bezos.
Bezos’ optimism toward the future was echoed by Amazon CFO Tom Szkutak who pointed out the great success of Amazon Prime over the past year: "We are seeing that certainly in the number of Prime members that are subscribing and so that has some short-term impact but great long-term impact as we retain those Prime members," said Szkutak.
Sales growth and new product innovation are hallmarks of a successful company, but Amazon will have to try harder to contain costs in the coming quarter. One three- month mishap might be forgiven but shareholders are not likely to tolerate two in a row.
Amazon common shares are down more than 10 percent in late afternoon trading.