Amazon posts 26 million loss despite growing sales and new services

For its second quarter earnings for the 2014 fiscal year, Amazon is promoting its growth in sales as well as new products and services, but despite the positive outlook the web retailer's earnings paint a different picture. Amazon saw losses widen to $126 million for the quarter, which is quite the jump from a $7 million loss from a year prior.

Yet despite these losses, it seems that Amazon's other services are doing fine. The company is pleased with the launch of Fire TV, a product that debuted earlier in the year, and Prime Music. It also added Sunday delivert service in many markets and says that Amazon Prime customers can order as late as Friday and have packages delivered by Sunday.

The company noted that sales are up as much as 23 percent year-over-year and that it had generated a whopping $19.34 billion in sales.

The company is also highlighting its Fire Phone, a brand new product that recently launched. Given the timing of Fire Phone's launch, any sales of Fire Phones wouldn't be included in this quarterly report, which closed on June 30, 2014, so we will have to wait until the next quarter to learn more. Amazon's debut smartphone is seen as a product that will help expand Amazon's e-commerce appeal by leveraging Amazon's services like Prime, Instant Video, and Prime Music.

Investors do not seem pleased with results and Amazon's share prices are down in after-hours trading.

Source: Amazon

 

Reader comments

Amazon posts $126 million loss despite sales growth and new services

37 Comments

Investors really won't be pleased after the Fire Phone flops

"The world would be so boring without idiots like you to amuse me."

Odd. Usually investors don't care about Amazon losing money.

Glad they woke up about it, finally. Well, I suppose glad isn't the right word, but I just wonder what took them so long.

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It's about time amazon was forced to face reality. They don't make any money and their business model is not sustainable. Sooner or later amazon will have to make some tough decisions, which will hopefully restore some balance in the retail sector.

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I like Amazon as a retail site but other services are eh. prime is cool for shipping but other than that. better options available.

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Amazon is about growth, not gouging for profits, they make tremendous amounts of money, they just happen to spend a lot of it on growth.

Tough decisions = ruining their reputation for avarice.

Except amazon can't do diddily squat if they're not making any money. At the very least they need to be breaking even, and they're not even doing that. A company with as high a revenue as Amazon's but still loses money is not healthy. Their business model is not healthy, and its starting to make Bezos look less like a Steve jobs and more like a con man.

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To grow you have to spend money. Profit will come in the long run. A lot of people are complaining that they are now getting taxed by amazon. The reason why you are getting taxed is because they have opened up a distribution center in your state. In the past year amazon has built 7 warehouses in California. There are more and more distribution centers being built in different states. The setups of new building is costly but in the end customers get their products faster. I wouldn't be surprise if they created their own delivery department after the fiasco with UPS during the last holiday season.

Amen. Been saying for years Amazon is nothing more than a shell game. People are also waking up to the fact that their prices are not that great. They really need to start making money. It's been what., 20 years of losses?

The big joke is that this company has never made a profit and yet Bozos (I spelled that the way I intended) is considered a genius AND billionaire.

As long as they continue using the worst shipping courier ever created--Lasership--I hardly want anything to do with them. :-/ wish they'd allow a choice of courier. Hell, I'd gladly pay a little more for UPS or FedEx if it means avoiding lasership.

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My stuff is usually delivered by FedEx, and pretty early in the morning, too. Just this week I ordered something on Monday night and it was delivered by 10am on Wednesday. Obviously, YMMV depending on where you live and whether you have Prime, but my experience has been great.

After one of my coworkers had two problem deliveries by the USPS, for which he called Amazon both times just to inquire not even to complain, they tagged his account to use USPS as a last resort for all of his future deliveries. Amazon is all about customer service, so just give them a call.

I think that Amazon has another 12-18 months to shift from a 'growth at all costs' business model to a balanced model that invests 60%-80% of their profits back into the business and takes the balance as profit.

Without a great deal of effort Amazon could throttle back on the growth in investment spending and show a profit in the range of $250-$300MM annual run rate. Not many companies can say that!

the dev and infrastructure costs for Fire Phone and the contracts for the Music service probably cost them a ton of money that has yet to be recouped... if it ever will.

amazon has been about making money, which they do and spending alot of money to make sure they are around for a long time. I know ppl around these parts dont like amazon because of what they do to Android OS but they are spending alot of money now to make sure they are set up for the future.

That's the same line that's been parroted for the last 10 years. Amazon is no longer a startup. At some point, they are going to have to actually start making money if they want to stay alive.

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Amazon needs to abandon making devices and just focus on being a retailer. That's what they're good at.

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Amazon fire was cool when it came out cause it was the first decent tablet at that price range, there are far better options now.

Can't think of anything.
Who else made a $200 tablet with a snapdragon 800?

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I wasn't talking in terms of specs I meant more in terms of usability. I would bet a lot more people would go for a Nexus 7 or an iPad Mini these days over a Kindle Fire HDX.

The HDX is nice but it takes a lot more work out of the box to get it to work with "normal" android things like gapps

I'm going to cancell my memebership, evwry thing I was watching for free there chsrging for now. I was still watching episodes of some of my favorite old shows, now I have to pay for each episode. Thats not going to work for me. I have noticed they don't include very much any more for the $99 a year. You still have to pay for everything.

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Doesn't surprise me amazon is bigger than just retail and devices their hosting(cloud for people that call it that) sector is becoming massive. My guess is the amount they are putting back into it are eating into any profits.

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See but that's just it. The cloud services were supposed to be the parts of the business driving profits because amazon had already figured that part out and had built out enough capacity that they didn't need to continue to invest massively. But then google and Microsoft came along and crapped all over that, which has left amazon over leveraged in their devices/retail side to the point that they continue to lose money.

Amazon's strategy has failed, which is why wall street is reacting the way it is.

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You do realize that a $126M loss is less than 1% of their $19B+ in revenues, right? That's like a person who makes $19K/year having a credit card with a balance of $126. Yes, they have losses each year, but that's why there are investors and banks letting them borrow, they might as well be considered to be breaking even.

Most people really don't have any concept of these numbers and how vastly different a million and a billion are. Just chop off the zeros, it really should be reported that they had revenues of $19,000M and losses of $126M or revenues of $19B and losses of $0.126B.

AWS is their one crown jewel. It's one area they can point to be being dominant with Netflix as their big win. However MS keeps adding datacenters and capabilities to Azure so in a few years even AWS will not be #1 any more.

Prime for instant streaming is pretty useless. I mainly only use it for the free 2 day shipping, which is why I hated seeing the price go up.