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Amazon profit down despite increased revenues

Warwick Ashford

Amazon has reported that its quarterly profit slipped despite revenue climbing 38% compared with the same period a year ago to $9.86bn (£5.99bn), beating analyst estimates of $9.54bn.

The online retailer's net income for the quarter that ended 31 March was $201m, or 44 cents per share, one-third less than the same period a year ago.

The Seattle-based firm's share price fell by as much as 9%, to $168.68, in extended trading on news of Amazons earnings figures and next quarter forecasts, which fell short of expectations.

The company expects second quarter operating income of $95m to $245m, but analysts surveyed by Bloomberg predicted, on average, operating income of $369.5m.

Jeff Bezoz, Amazon chief executive, highlighted the company's long-term investments in innovation.

"We love inventing on behalf of customers and have never been more excited about the long-term opportunities," he said.

But analysts say the increased and prolonged investment is putting margins under pressure, with capital spending more than doubling to $298m in the quarter.

Amazon has increased capital expenditures for eighth quarters to fund plans to build new datacentres and nine warehouses in 2011.

Amazon has introduced several new products in the past quarter, including audio books on Kindle, Appstore for Android, Amazon for Windows Phone 7, Cloud Drive and Cloud Player.


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