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AMAZON Q3: SHARES FALL ON WIDE LOSSES

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AMAZON Q3: SHARES FALL ON WIDE LOSSES

Oct 24 2014, 7.45am GMT

Stock.com

The online ecommerce company Amazon chose investments over profits, leading to losses in Q3.

Shares dropped nearly 11 percent in afterhours trading; recovery has been slight nudging up 0.07 percent today.

Amazon’s historic losses amount to $437m in the three months to the end of September.

Amazon’s announcement was upbeat, demonstrating net sales up by 20%, but losses outstripped the positive numbers and markets reacted negatively by naming Amazon as one of the worst performers in the S&P 500 as shares dropped 21 percent over the course of 2014.

Amazon has favoured investment in their international infrastructure, specifically China, India, Italy and Spain, leading to a negative operating margin of 0.4 percent. Kindle devices, cloud computing infrastructure and international warehouses have also worked against the profitability of the company. North America however, saw positive margins of 4.3 percent.

Highlights:

  • Net sales increased 20% to $20.58 billion in Q3, compared with $17.09 billion in Q3 2013.
  • Common shares outstanding plus shares underlying stock-based awards totalled 481 million on September 30, 2014, compared with 475 million one year ago.
  • The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on net sales was $13 million.
  • Operating loss was $544 million in Q3, compared with operating loss of $25 million in Q3 2013.
  • Net loss was $437 million in Q3, or $0.95 per diluted share, compared with net loss of $41 million, or $0.09 per diluted share, in Q3 2013.

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