Amazon posts first loss in years after Living Social buy

29/10/2012

Amazon has reported third quarter results below expectations, including a large loss related to its stake in online coupon business, LivingSocial. Despite a 27% increase in Q3 sales Amazon the company's investment programme cancelled out US$13.8 billion of sales. Amazon posted a loss of US$274 million, down from earnings of US$63 million a year earlier.

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Amazon said its US$199 Kindle Fire HD tablet is its best-selling product worldwide.

The company predict next quarter sales of between US$20.3 billion and US$22.8 billion - a rise of 16% to 31%.

Beyond LivingSocial, Chief Financial Officer Tom Szkutak attributed the quarter's loss to Amazon's heavy investments in its Kindle e-reader and tablet business, as well as in new geographic locations such as China and in video content. Amazon is also spending money on centers for fulfilling orders. It said this month that it's hiring 50,000 temporary workers at its distribution centers across the U.S. during the holiday season.

The quarter's operating expenses rose 28 percent to $13.8 billion from $10.8 billion.
Amazon.com said its $199 Kindle Fire HD tablet is its best-selling product worldwide, but as usual, it did not give specific sales figures.

"Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point," founder and CEO Jeff Bezos said in a statement.

Amazon has a larger version of the Kindle Fire HD out next month.

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