Amazon predicts losses of US$410-US$810m in Q3

25 Jul 2014

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Amazon’s second-quarter results reveal the e-commerce giant expects to lose US$410-US$810m in the third quarter, with a current quarterly loss of US$126m double the figure analysts predicted for the company.

In comparison, in the third quarter of 2013, the company posted a loss 16 times less than its next quarter estimate of US$23m.

Amazon also reported second-quarter sales had increased by 23pc to US$19.34bn.

The company may argue this is all a part of its strategy to sell its Kindle hardware at a relatively low price and then try to encourage consumers to become part of its greater online ecosystem to buy books, music and a whole host of other products.

The company recently announced its Kindle Unlimited subscription service, that will charge users US$10 per month to have a Netflix-like service for books and audiobooks, in an effort to encourage more use of its e-readers. Yet Amazon has been engaged in a battle with the book publisher Hachette Book Group over e-book pricing, leading to a number of titles being delayed for release.

Amazon’s head of finance, Tom Szkutak, said the company is “not trying to optimise for short-term profit”, and with the upcoming launch of the Amazon Fire phone, much will be pinned on its success if Amazon is to maintain a level of financial stability.

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Colm Gorey is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com