Amazon records massive revenue but posts $US126 million loss

AMAZON sales are surging but it has massively failed in the one department that really matters.

Amazon chalked up a $US126 million loss despite a surge in revenue.

AMAZON has done it again. Despite making oodles of money — $US19.34 billion — in the three months to June, it couldn’t even chalk up a single dollar in profit.

Its shares fell after the e-commerce retailer reported a deeper-than-expected $US126 million loss as expenses outpaced a surge in revenue.

Amazon has long focused on spending the money it makes to grow and expand into new areas. In one of its most high-profile moves, Amazon is introducing its own smartphone, the Fire, which starts selling Friday.

The company has been heavily investing in services for its loyalty program, Prime, which costs $US99 a year, and includes free two-day shipping on many items. It has added a grocery delivery services and music streaming for Prime Members as well as offering original TV shows and apps. It also expanded Sunday deliveries and recently began offering a set-top video streaming box.

Amazon doesn’t disclose how many Prime members there are but it said it added more Prime members in the second quarter than it did in the second quarter last year, despite the fact that it raised the cost for Prime by $US20 earlier this year.

Amazon founder Jeff Bezos.

For years, Amazon has struggled to generate any significant profit despites its mammoth revenues. Last year, it recorded a profit margin of 0.36 per cent.

Investors are usually accepting of Amazon’s thin profit and focus on strong revenue growth. But not this quarter.

The Seattle-based company’s shares fell $US35.17, or 9.8 per cent, to $US323.44 in Thursday’s aftermarket trading.

Amazon posted a loss of $US126 million, or 27 cents per share, compared with $US7 million, or 2 cents per share, in the same quarter a year earlier. The average estimate of analysts surveyed by Zacks Investment Research was for a loss of 13 cents per share.

The company said revenue rose 23 per cent to $US19.34 billion from $US15.7 billion in the same quarter a year earlier. Analysts expected $US19.33 billion, according to Zacks.

Looking forward, the company expects third-quarter revenue between $US19.7 billion and $US21.5 billion. Analysts expect $US20.81 billion, according to FactSet.

Amazon’s results come as the company is in a public squabble with publisher Hachette, reportedly over e-book prices. Amazon did not give an update about the talks.

Amazon shares have dropped 10 per cent in 2014, while the Standard & Poor’s 500 index has climbed 7.6 per cent.

Originally published as Amazon records massive revenue but posts $US126 million loss