Amazon Q3 2011 Profits Fall 73 Percent

(Reuters) - Amazon.com Inc shares slumped after reporting weaker-than-expected results as it spent heavily on a new tablet computer and other long-term projects.

The stock plummeted 14 percent to $194.31 after hours, after closing at $227.15 on Nasdaq.

The world's largest Internet retailer said on Tuesday its third-quarter net income was $63 million, or 14 cents a share, versus $231 million, or 51 cents a share, a year earlier. Revenue was $10.88 billion, up 44 percent from the third quarter of 2010, it added.

Analysts had expected Amazon to report third-quarter earnings per share of 24 cents on revenue of $10.95 billion, according to Thomson Reuters I/B/E/S.

"Lower profit margins would be acceptable, but for the lower-than-expected revenue growth numbers," said Fred Moran, an analyst at The Benchmark Co.

Moran had expected third-quarter revenue growth of as much as 50 percent.

(Reporting by Alistair Barr; Editing by Richard Chang)

Copyright 2011 Thomson Reuters. Click for Restrictions

Comments

[kerriberri]

05:15 PM on 10/26/2011

Stock prices are relative.

During the 2008/2009 crisis, Amazon stock tanked at $38 a share (wish I'd bought some!).

I think it's doing great on fundamentals and is positioned between the net and brick and mortar like NO OTHER retailer on earth. It's unlike Google or Apple or any other tech company in diversification & Bezos has put the company in a unique position to profit from a dizzying array of revenue streams in the future. Think of the MILLIONS of Kindle users out there & just how many books/mp3s/videos we'll buy/rent in the future. Couple that to state of the art warehouses, logistics, cloud computing, etc.--Bezos' vision is mind-boggling & this is a consumer-centric company.

I also LOVE the power he's giving to writers, freeing them from their historically servile relationship with publishers.

Go Amazon!

[PotholesInMyLawn]

04:05 PM on 10/26/2011

Caption for picture:

Gentlemen, my name is Dr. Evil.

In a little while, you'll find out that the Kreplachistani warhead has gone missing.

-If you want it back, you'll have to pay me...ONE MILLION DOLLARS!

[UnRed]

01:06 PM on 10/26/2011

For better or worse, Amazon IS the alternate face to Walmart in the retail world and that isn't gonna change any time soon. Earnings are a moving target and it makes a poor metric for performance; especially in the retail world.

This result has nothing to do with management quality, "arrogance", or (even) national economic health though it will touted as such. The REAL issue is what happens to the stock price from here to about 210 - 220 AFTER about mid-late Novermber because that will tell you what Smart Money has to say. Right now, they are non-committal (regardless of the current price action).

In other words, this ain't no thang. Of course, nobody but the clueless would be a buyer (or holder) around here.

[edvince]

11:33 AM on 10/26/2011

okay let me see if I have this right. 2 wks ago Amazon was lead topic in Financial news because of profits now this. Then I think of OWS grassroots campaign and why the protestors are doing what doing. Capital markets kinda looking like a LasVages casino.

[LeeCalif]

11:26 AM on 10/26/2011

But can't you take notes with the Nook ?????

[bondcliff]

07:16 PM on 10/26/2011

I don't know about the nook, but you can with the kindle.

[antfarmer]

11:26 AM on 10/26/2011

Those of us that got tricked into buying a crappy and seriously flawed Kindle (mine turned into a brick after 20 hours of use: screen had permanent horizontal lines and buttons unresponsive) don't mind punishing Amazon a bit by cutting back on purchases. If you have ever dealt with one of the "help" people at Kindle (who shamelessly promise to "make things right" and then vanish without doing anything or even instructing an underling to make good on promises), you will have second thoughts about dropping $200 on a newer Kindle that might prove equally defective, badly engineered, and not durable. Like Netflix, consumers need to punish Amazon a bit for their hubris, dishonesty, and failure to stand by their crappy products. If their financial problems are really about development costs in producing the next generation of Kindle devises, maybe they should have invested a bit in honoring their promises to customers who bought the defective second generation Kindles that brick and have permanent screen failures after 20 hours of use. A bit of good relations with customers they p!ssed off might have been enough to ensure customer loyalty and better sales. Instead, sticking us with $190 devices that fail after 20 hours with no remedy or economical replacement was a bad business decision. Customers that received this kind of shoddy treatment have no other recourse other than to warn potential Kindle customers to avoid making the same mistake.

[Attilatheblond]

11:38 AM on 10/26/2011

Ever increasing corporate arrogance + ever shrinking real wages = Sales WILL go down

How come all these expensive corporate executives don't get that simple equation?

[Susaine]

11:48 AM on 10/26/2011

I purchased a second generation Kindle when it was released and have been using it for a couple of years now with no problems -- I use it almost every day. I am sorry for your problems with it, though, and it sounds like the folks at Amazon didn't respond to your issues very well.

[maddogjohnson]

11:18 AM on 10/26/2011

The wal mart of web shopping. If you have ever done business with them and I don't mean buying stuff but selling stuff you will see how expensive they are. They take a significant amount of sales cost. They do provide a service by providing marketing that you would have to pay for elsewhere but the amount is over the top. Most small businesses avoid the amazon if at all possible or use it temporarily to help boost sales. If they would charge a decent rate more would use them. I'd like to see them fold but it won't happen in my lifetime because Americans in general have no clue about product cost ,development, sourcing and marketing and will certainly keep shopping there.

[nanjemoy]

11:11 AM on 10/26/2011

Revenue was up - revenue was down - the percents were this and that....

Are we watching tides? Is there any actual analysis? Why give us a "story" that has no story?

[edvince]

11:34 AM on 10/26/2011

exactly

[OldSchool4942]

10:56 AM on 10/26/2011

Has anyone noticed the changes in the web-site itself? Seems harder to get a price without going through a process. Makes camparitve shopping harder. I just don't like a 2 tier system that they have started. If you join and pay, you get benefits.
I will do business with them, but they are losing the go to place that they once were.

[db025]

10:51 AM on 10/26/2011

Some of the loss can be accounted for by the investment in the tabled, but about 80% of the lass is a direct result of lost sales when states opted to impose sales tax on internet sales. I used to buy books from Amazon almost weekly. I haven't made a purchase in about six months now. It may only be a small percent on each purchase, but it adds up over a year. I have better things to spend my money on that a government that ignores my wishes and hands out my hard earned money to people who don't have my work ethic.

[Snake-Eyes]

09:54 AM on 10/26/2011

I have dealt with Amazon for years. I have never had any problems with them. I look forward to getting a Kindle Fire after they're released & some of the bugs are worked out. I think amazon has a great insight into the future & are on the right track. Profits are down because they are investing that $ into the future. I think that's a much better concept that letting those profits line the wallet of some fat cat CEO.

[JerseyGirl4Obama]

11:02 AM on 10/26/2011

I agree with you even though I have a Nook Color. :)

[hifie]

09:31 AM on 10/26/2011

The Best Way for consumers to express their dissatisfaction is with their wallets. I fully understand the requirement of company growth. When the public believes that it is in trouble or if they think they are being gouged, they cut back on purchases. Look at Netflix. With Netflix it is the first time in years that the public stepped up to the plate and expressed the dissatisfaction by not spending..America needs more of this for companies who continue to locate the work offshore instead of the US. They are having record profits. Step hard on their wallets and they may get a clue that we are not happy with jobs being shipped away for the past 40 years.

[Mr MOTO]

10:33 AM on 10/26/2011

Revenue was UP, so I suspect that the consumers are not dissatisfied.

[Attilatheblond]

11:46 AM on 10/26/2011

Yep. I shake my head at those who are excited about not buying anything on Nov 5, like that will get the corporations' attention. Those execs do not care about the sales, or lack of, on one day. They know you will buy on the 4th and the 6th.

The only way to get their attention is to not buy ANYTHING you don't absolutely need for a very long time. Quarterly reports get their attention. Annual Reports can get them fired. Do to them what they have been doing to us.

Don't give in, don't go along, don't buy anything but the barest essentials, food, fuel, the occasional replacement garment, and do that at thrift stores. And grow some of your food.

Need books? Go to the library. Most even have e-books you can borrow for your reader devices.

[BillyBoard]

09:05 AM on 10/26/2011

It's just a bad economy for everyone. If the stock price goes lower, it's a buying opportunity. Amazon is a "player" and their future after 2012 will be very bright!

[Attilatheblond]

11:47 AM on 10/26/2011

No retailer's future will be bright until the 99% start seeing some improvement in THEIR stock.

[BillyBoard]

11:57 AM on 10/26/2011

Attie.... I'm sure you won't be buy shoes!!

[ILoveGreatDanes]

08:57 AM on 10/26/2011

How does anyone call $10.88 billion in revenue a failing company? Amazon may not have made as much profits as they liked, but no company ever does. They undercut the price on the Kindle Fire intentionally to attract future business. I buy stuff from Amazon and other online retailers frequently because I don't like paying the steep Texas sales taxes and it saves me trouble of driving around looking for stuff. Amazon will be fine as long as they don't hire the Netflix CEO to run the company.

[concernedcitizen13]

09:27 AM on 10/26/2011

That is what is killing jobs and small businesses. The uneven playing field created by allowing some to not have to collect sales tax, and forcing small businesses to collect them. If the government wanted to really help small busineses they would require everyone to charge sales tax, until they do the online busineses will have a competitive advantage over businesses that actually support their local economies and communities. Next time your going to save taxes by buying online think about the money your are legally suppose to pay on all your online purchases called "use" tax. If you leave this line blank on your tax return you are stealing from your community. Buy and shop local it is the only way to prevent your local economy from going down the drain.

[Mr MOTO]

10:37 AM on 10/26/2011

I thought about that 3 years ago. The challenge is that sales taxes are collected by the state, not the federal government. So, if you have a store - we'll Best Buy - in Minneapolis, but the buyer is in North Dakota, which state gets the sales tax? In the case of Minnesota, both Target and Best Buy are there, so they would receive a wind fall, but if you a consumer based factor, then states such as California and Texas would get the windfalls.

[ILoveGreatDanes]

10:39 AM on 10/26/2011

It evens out just fine. I make 90+ % of my purchases in my hometown, and our state sales tax rate is 8.25%. So brick and mortar stores get plenty of my money. It's a welcome relief for me to save a dollar or two on sales tax on the few purchases I make online. There's nothing at all wrong with the customer trying to save money, especially with corporations chomping at the bit for every penny they can possibly get from us.

[FortressOrange]

10:04 AM on 10/26/2011

Who is calling it a 'failed' company? The article surely doesn't. Check the Fortune 500 list. There are plenty of companies that make tens of billions in revenue but have negative profits. The names would shock you.

[Stewpendous]

08:56 AM on 10/26/2011

I find it funny that there are so many comments from people that think this is the end of Amazon. As the article mentioned, their stock was affected by there future investments. I.E. The Kindle Fire. Wait and see what happens when this single device get integrated into millions of American homes and those people become amazon junkies that buy all there products, movies, music, TV shows, etc, etc from amazon. This is not the end but a new beginning!!! Wait and See!