Amazon again delivers soaring sales but posts a huge loss

NEW YORK: Amazon.com has long asked investors anxious for profits to be patient as it built its infrastructure and launched new services that it argued would position the e-commerce giant for long-term success. On Thursday, Amazon reported again that it has failed to turn a profit, this time posting a stunning loss of $437 million in the third quarter, compared to a $41 million loss in the same period last year.
Amazon has been spending money on a wide range of projects.
It spent more than $1 billion to acquire video game platform Twitch in August.
It developed new versions of its Fire phone and Fire HD tablet.
It is creating original TV programs under its Amazon Prime Instant Video banner and expanded its AmazonFresh grocery delivery service into new markets.
But the continued losses appear to be making investors question whether the company that seeks to be “the everything store” is pulling itself in too many different directions.
Amazon released the results after the markets closed, but its shares have fallen more than 20 percent so far this year.
Amazon’s forecast for the crucial holiday season is also not especially encouraging: The company expects sales to increase between 7 and 18 percent over the same quarter in 2013.
While such sales growth is far better than what other major retailers expect, it would mark a slowdown in growth for the Amazon juggernaut.
In the most recent quarter, Amazon raked in $20.58 billion in sales, a 20 percent increase over the same quarter last year.
Amazon has been in an “investment mode” for several years, Thomas Szkutak, the company’s chief financial officer, said in a conference call with investors. Given that position, company executives “know that we have to be very selective about what opportunities we pursue.”
Szkutak did not give any indication that the company plans to pivot to focus more on delivering profits, saying, “Our goal is to maximize free cash flow over the long term.”
The company told investors that its Amazon Prime membership program has seen “great retention” and is “growing very fast” despite increasing the price from $79 to $99 earlier this year.
Earlier this month, The Wall Street Journal reported that Amazon planned to open a physical location in Manhattan. It’s not clear whether the location would be a temporary pop-up store or a permanent storefront. While Amazon has not confirmed the report and did not address it during its call with investors on Thursday, the move would represent a major shift in strategy for a company that upended brick-and-mortar retailing.