Amazon may face a blue Christmas
Print Edition
IT might be a blue Christmas for Amazon.
The world’s largest online retailer gave a disappointing forecast for the crucial holiday quarter. The company also reported a wider loss than analysts expected for the third quarter.
Thursday’s financial results could end investors’ patience with Amazon’s slim profit and its strategy of investing heavily in new products and services to spur revenue growth. The stock price tumbled 11 percent in after-market trading. That’s on top of the 22 percent decline the stock has already suffered this year.
Amazon has long focused on spending the money it makes to grow and expand into new areas.
It launched a smartphone, the Fire, earlier this year, and has been offering a set-top video streaming device, a streaming video service and several tablets and e-book readers.
The company has also been investing in services for its US$99-a-year loyalty program, Prime. It has added a grocery delivery services and music streaming for Prime members as well as offering original TV shows such as the critically acclaimed “Transparent” starring Jeffrey Tambor.
But it is increasingly clear that what investors want more than revenue growth is a solid profit.
“The market was looking for more in terms of revenue and operating income and the fourth-quarter outlook,” said Morningstar analyst R.J. Hottovy. “It’s going to be a competitive landscape for retailers this holiday season and retailers will compete aggressively for consumers.”
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