Amazon posted a third quarter net loss of $274 million on a sales increase of 27%, to $13.8 billion. The loss was higher than analysts had expected and was attributed to a host of investments, ranging from new Kindles to new warehouses. Even as investors worried over the results, in a prepared statement chairman Jeff Bezos touted Amazon’s willingness to invest in new, consumer friendly devices. “Our approach is to work hard to charge less. Sell devices near break even and you can pack a lot of sophisticated hardware into a very low price point,” said Bezos. “And our approach is working – the $199 Kindle Fire HD is the #1 bestselling product across Amazon worldwide. Incredibly, this is true even as measured by unit sales. The next two bestselling products worldwide are our Kindle Paperwhite and our $69 Kindle. We’re selling more of each of these devices than the #4 bestselling product, book three of the Fifty Shades of Grey series.”
Amazon's investments also include expansions into new "geographies," with the company in invesment mode in Spain and Italy and planning a longterm investment in China. The company's worldwide media segment sales rose 11% in the quarter, to $4.60 billion, while worldwide electronics and other general merchandise sales increased 36%, to $8.56 billion. In North America, media growth slowed somewhat, but the company said sales of digital content grew very fast in the period. Although the company didn't provide many details, it said digital sales speed up after it releases a new device, something that should bode well for the future. Kindle Fire users buy all types of content, the company said, while Kindle Fire owners who are also Prime members watch a lot of fre video and are activie in the Kindle Owners Lending Library.
Amazon has begun collecting taxes in a number of new states, but said it was too early to tell if that will have any impact on sales.
The e-tailer is expecting a strong holiday period with fourth quarter sales projected to increase between 16% and 31%, although that top line gain may not translate to profits as the company said it could have an operating loss of as much as $490 million in the quarter as earnings of up to $310 million. It had operating income of $260 million in the fourth quarter of 2011.
