Amazon declares $7m loss due to operating costs

Online retailer Amazon has reported a second quarter loss of $7m, despite a 22% rise in sales to $15.7bn

Online retailer Amazon has reported a second quarter loss of $7m, compared with income of $7m in the same quarter in 2012 and despite a 22% rise in sales to $15.7bn.

The loss – equivalent to about two cents a share – came as a surprise, as many analysts had forecast a profit of five or six cents a share.

Rising operating costs are responsible for the loss, which led the share price to dip 2% on the news in after-hours trading, according to the BBC.

Operating income for the second quarter was $79m, down 26% compared with the same period the year before.

Analysts said Amazon has been affected by a lack of consumer confidence in Europe. While sales in North America increased 30%, international sales rose just 13% and did not make a profit.

Investors were disappointed with Amazon’s forecast of sales of between $15.45bn and $17.15bn in the next quarter.

Although this represents an increase of between 12% and 24%, the lower end is below analysts’ expectations of around $17bn.

Amazon’s share price is not expected to take a severe hit because investors have typically tolerated thin profits because of the company’s investment in digital media and expansion in new markets such as China.

Tom Szkutak, Amazon's chief financial officer, told investors: "You should expect us to be in investment mode for some time." However, some analysts have warned that investor patience will not last forever.

The company is also investing in digital services and in becoming a broader technology company with its Kindle tablets and cloud computing, video streaming and digital download services.

“We’re so grateful to our customers for their response to Kindle devices and our digital ecosystem this past quarter,” said Jeff Bezos, founder and chief executive of Amazon.

The top 10 selling items worldwide were all digital products, he said.

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