Amazon is unable – or at least unwilling – to make a profit even as its business booms.
The company reported Thursday that its revenue increased in the second quarter to $19.34 billion, up 23 percent from $15.70 billion in the year-ago quarter. That matched analysts’ expectations.
But losses mushroomed. Amazon had a net loss of $126 million, or 27 cents a share. A year ago it lost $7 million, or two cents a share. Analysts had forecast a loss of 15 cents a share.
Investors were perturbed by the report, issued after the market closed. The stock immediately fell $19, or about 5 percent, in after-hours trading.
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For the third quarter, Amazon forecast more of the same. It expects a healthy rise in revenue but an operating loss of as much as $810 million, compared with a loss of $25 million in the third quarter of 2013.
The basic Amazon narrative is now well-known: It has become one of the country’s largest retailers by focusing on growth rather than profit. It takes the money that investors would normally demand as earnings and reinvests it in new warehouses, faster delivery, hardware and services.
In recent weeks, Amazon, which is based in Seattle, introduced Zocalo, a document storage and sharing service that grew out of its fast-growing web services division. It began a program to allow readers to consume as many e-books as they want for a set monthly fee. And it is starting to ship its long-awaited entry in the smartphone sweepstakes.
The phone, the result of years of development by thousands of Amazon programmers and designers, is meeting some resistance from reviewers. They expected a device modeled after the Kindle tablet - functional and cheap, meant for the masses rather than trendsetters. Instead, the Fire phone is expensive and loaded with innovative features that, some reviewers said, do not work particularly well.
During the quarter, a conflict with a major publisher, Hachette, went public. Amazon wants terms that Hachette feels are ruinous, and both sides are accusing the other of bad faith. Amazon has come under pressure from many prominent authors, who accuse it of holding their books hostage. Other authors, who use Amazon’s self-publishing platform, have rallied to the retailer’s side.
Whatever deal is ultimately struck - assuming the parties do not remain at odds until the sun grows dim - Amazon has been the loser in the public relations war. People have announced on Twitter and Facebook that they would be ordering less from the company. Maybe they did, although it is not readily apparent in the numbers.
Amazon shares have been under pressure for much of this year, and at one point were down about 25 percent. Investors apparently were a little weary of an endless cycle of investment with little to show for it. Recently, however, the stock has rebounded somewhat, to the point where it was only about 10 percent off its high.