Amazon stock dips after anaemic third quarter, tepid reception for Fire Phone

Posted:
in General Discussion edited July 2014
On the same day that Amazon begins to ship its new, widely-panned Fire Phone to consumers, shares of the online retailing giant are trading down nearly 10 percent after the company posted a $126 million loss on nearly $20 billion in sales in its fiscal second quarter.




Amazon said that the narrow loss -- which came despite a $4 billion year-over-year jump in sales -- can be attributed largely to new business investments, though some of its existing cash cows also slowed. A decline in business at Amazon Web Services affected the bottom line in a "meaningful way," the company noted.

Though Amazon does not provide detailed expense breakdowns, much of the new investment is likely tied to the Fire Phone. The handset, unveiled in June, sports advanced image recognition and three-dimensional tracking capabilities.

Unfortunately, the new device was not as well-received as Amazon's other hardware projects. Many reviewers panned it as "full of gimmicks," saying it is covered in "whiz-bang frippery" and that some of its headline features are "sometimes outright frustrating."

The bleeding does not look set to stop any time soon, as Amazon predicted an even larger shortfall for the third quarter. Amazon CFO Tom Szkutak warned investors that its losses for that period could top $800 million.

At press time, shares of Amazon were down nearly 10 percent to under $333.
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Comments

  • Reply 1 of 109
    anantksundaramanantksundaram Posts: 20,225member

    The only puzzle is why it's taken so long. Look out below.

  • Reply 2 of 109
    kpomkpom Posts: 653member
    Finally the Street figured out that Amazon has made less in 18 years of existence than what Apple, Google, and Samsung individually earn in disappointing quarters.
  • Reply 3 of 109
    SpamSandwichSpamSandwich Posts: 33,408member
    I still wouldn't buy their stock again. They are the epitome of a 'dead company walking'.
  • Reply 4 of 109
    asciiascii Posts: 5,941member
    I don't know why they don't just put their prices up a little bit. On $20bn in sales it wouldn't take much of a percentage increase to cover a few hundred million in losses.
  • Reply 5 of 109
    adonissmuadonissmu Posts: 1,774member
    I guess investors want to make money, who knew?
  • Reply 6 of 109
    gprovidagprovida Posts: 252member
    Amazon is experiencing the effect of investments not being profitable. although most of this has been hidden in their reports. I suspect Kindle, Fire TV, etc., are also contributing to the overall limited profitability, although not evident in their reports. Hardware sold at or below cost to achieve other sales e.g., books and movies, are all well and good, but without clear associations supporting these expectations, its all speculation. And with Amazon it is almost entirely speculation, in fact, it almost calls out for regulatory attention. So Amazon's stock seems to be built on "faith and analysts narratives" regarding their current accomplishments and future opportunities. When this faith gets challenged or suspect, it is not impossible to see a run on the stock with its astronomical PE ratios.

    To a lesser expect [although not a lot lesser], similar "faith" in Google's many "innovations and acquisitions" which have NOT translated into bottom line profitability at least in a meaningful way. They still are overwhelmingly a one trick pony [search and advertising] sounds like Microsoft [just substitute Windows and Office]. Especially as they try to get into the "me-too" game in social, gaming, etc., that has been so problematic with Microsoft. But somehow is perceived as competitive and projects a bright future. Android is not a money maker, in fact, it is a cost center with dreams of big money in mobile advertising.
  • Reply 7 of 109
    1brayden1brayden Posts: 31member
    Quote:


     I don't know why they don't just put their prices up a little bit. On $20bn in sales it wouldn't take much of a percentage increase to cover a few hundred million in losses.


    If they increased prices they would not have any advantage over normal retail. IMO they are killing local retail / jobs while trying to put a toll booth in for transactions. The concept is showing cracks that it cannot be sustained.

  • Reply 8 of 109
    apple ][apple ][ Posts: 9,233member

    Awesome!

     

    I was following this stock yesterday when it fell after hours and I was laughing my ass off. I had no personal stake in this stock, but it just felt really good to see it drop so sharply.

     

    It's about damn time that they got punished for continuing to lose money and not living up to their ridiculous, extremely overvalued valuations.

     

    If you ask me, it didn't drop enough. It's still overvalued. 

  • Reply 9 of 109

    I love Amazon, I'm a Prime member and use their services often.  However, I would never buy their stock.  A PE ratio >500 is just nuts.  

     

    Agree with the above post, they need to up prices and make some actual profit.  Good for amazon and good for some brick and mortar stores that may then be able to compete.  I think Amazon's time of expansion above profit needs to come to an end.

  • Reply 10 of 109
    apple ][apple ][ Posts: 9,233member
    Quote:

    Originally Posted by AppleInsider View Post



    At press time, shares of Amazon were down nearly 10 percent to under $333.

     

    TYPO: I think you mean $323.

  • Reply 11 of 109
    mrboba1mrboba1 Posts: 276member

    A P/E of 500?

     

    Nice, AMZN.

  • Reply 12 of 109
    jungmarkjungmark Posts: 6,867member
    Wouldn't it be funny if Amazon raised ebook prices?
  • Reply 13 of 109
    Imagine what would happen if AAPL posted a loss in a quarter. What are you spending over $20 billion on, Bezos?
  • Reply 14 of 109
    apple ][apple ][ Posts: 9,233member
    Quote:

    Originally Posted by Carson O'Genic View Post

     

    Agree with the above post, they need to up prices and make some actual profit. 


     

    They did up their prices and the service has gotten worse.

     

    Before, the minimum order amount to get free shipping was $25 and then they upped it to $35 a while ago, and the last time (a month ago) I ordered something from Amazon that was more than $35, it sat there for days before they even shipped it out. That is just unacceptable and unprofessional.

     

    The next time I order something, it probably wont be from Amazon, because I am not willing to let my item sit around for days and days before they bother to ship it to me.

  • Reply 15 of 109
    MarvinMarvin Posts: 14,548moderator
    ascii wrote: »
    I don't know why they don't just put their prices up a little bit. On $20bn in sales it wouldn't take much of a percentage increase to cover a few hundred million in losses.

    It would push their decline. Putting prices up here and there means they won't always offer the best prices and that will lower their revenue. It's also easier to raise prices in hindsight. They have no idea what sales will be next quarter so they can't easily make that price judgement before the sales happen, they can only stick to the strategy of beating everyone else on price to guarantee the sales. Say they decided to raise prices 1%, that means a $499 computer becomes $503.99. They lose the psychological pricing of under $500. If they add it to shipping they lose the 'free shipping' selling point. They would be better cutting some expenses to cover their quarterly losses but the people running the company don't care about losses. They're just going about the business as they see fit.

    The net sales were $19.3b, cost of sales $13.4b, fulfilment (delivery, payment fess) $2.4b, technology and content costs $2.2b and the rest just over $1b. They almost broke even but their $94m income tax bill made up most of the loss. I'm not sure why they needed that provision when they made a pre-tax loss but it might be for profit from other quarters. They have about $37b in assets, $10.6b stockholder equity so they'll survive for a while yet. Investors are right to downgrade them though, they are starting to realise they've bought into a company that has no desire to pay them any returns. They aren't worth anywhere near Walmart comparing revenue and income but the stock values them at over 60% of them.
  • Reply 16 of 109
    schlackschlack Posts: 708member
    Amazon is leading the online retail market. I'm surprised there's so much hate here for the company and/or stock. They took a loss because they offered cut throat pricing and invested heavily in their future. Not because they have bad products or a bad business model or bad management.

    I see the 10% drop as a buying opportunity.
  • Reply 17 of 109
    Oh yeah. The sell at a loss, make up for it in volume business philosophy.
  • Reply 18 of 109
    philboogiephilboogie Posts: 7,671member
    At press time, shares of Amazon were down nearly 10 percent to under $333.

    "That's amazing! How did they do that?"
  • Reply 19 of 109
    jungmarkjungmark Posts: 6,867member
    schlack wrote: »
    Amazon is leading the online retail market. I'm surprised there's so much hate here for the company and/or stock. They took a loss because they offered cut throat pricing and invested heavily in their future. Not because they have bad products or a bad business model or bad management.

    I see the 10% drop as a buying opportunity.

    Amazon needs competition. They are abusing its monopoly powers.

    I wouldn't touch Amazon stock.
  • Reply 20 of 109
    allenbfallenbf Posts: 993member

    I really don't understand the gloating of Amazon taking a hit?  Is it because they're a "competitor" of Apple?  (I don't even see them as a competitor, personally).

     

    I enjoy the hell out of my Amazon Prime membership.  I am not interested in owning any of their hardware, but Amazon is a great retailer & they'll be around a long time to come.  

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