Amazon Cap Ex Hits Profits
Amazon.com Inc. (NASDAQ:AMZN) saw its shares dive after reporting a weaker than expected third quarter earnings report from heavy spending on long-term projects, including the Kindle Fire tablet. Those capital expenditures will drive Amazon to between a $200 million operating loss and a $250 million operating profit in the holiday quarter.
The company reported third quarter net income of $63 million (14 cents a share) versus $231 million (51 cents a share) from the previous year. Revenue rose 44 percent to $10.88 billion as compared to the third quarter of 2010. This came in lower than analysts’ expectations of 24 cents a share on $10.95 billion revenue. In the third quarter, sales grew 44 percent, less than the 51 percent gain in the second quarter.
“Amazon is also investing in video content and other publishing deals to support the device, while spending on datacenters for its cloud computing business and fulfillment for its online retail operations,” according to Reuters.
Amazon’s stock dropped 12.44% to $198.89 on the news. Shares are up 26.19% year to date. The stock has traded in a 52-week range between $156.77 and $246.71.