Fears of profit wipeout dent Amazon stock
SHARES in Amazon plunged more than nine per cent last night after the world’s largest online retailer warned it could make a first-quarter loss.
The firm forecast quarterly operating performance ranging from a loss of $200m (£126.9m) to a profit of $100m, below Wall Street expectations. The figures include $200m for stock-based compensation and other expenses.
Tom Szkutak, chief financial officer, said: “The wide range reflects the investments that we’re making.”
Amazon expects revenue of $12bn to $13.4bn over the quarter.
The firm has poured money into new categories and regions in an attempt to maintain its market-beating growth rates. It launched the Kindle Fire tablet in the autumn in an effort to sell more digital products such as e-books, apps and music in a market dominated by Apple’s iPad.
Analysts believe Amazon is selling the device at a loss, and yesterday the firm said sales of all types of Kindle devices, including cheaper e-readers, jumped 177 per cent over the nine-week holiday period to 31 December.
Amazon said fourth-quarter net income was $177m, or 38 cents per share, down 57 per cent from $416m, or 91 cents per share, a year earlier. Revenue rose 35 per cent to $17.43bn.
Amazon shares dropped 9.5 per cent to $175.84 in after-hours trading following the results.