Shares in Amazon Inc fell 11% in after-hours trading last night after the company reported a net loss of $437 million or 95c per share for the third quarter of 2014, up from $41 million or 9c per share for the same period last year.
Net sales continued to grow, increasing 20% to $20.58 billion in the third quarter, compared with $17.09 billion in third quarter 2013. However the company issued a weak forecast for Q4, traditionally the peak holiday retail period, of just 7% to 18%. Typically the company has seen 20% growth in Q4, which has encouraged investors to put faith in CEO Jeff Bezos as he continues to introduce new products and expand.
One of those new products has proved to be a spectacular flop. The company announced a €170m charge due to unsold inventory and supplier commitments relating to the Fire Phone which it introduced earlier this summer.
The company also announced a range of new products including the Kindle Voyage.
“Kindle Voyage, our thinnest, most advanced Kindle ever. Kindle Voyage has our highest resolution, highest contrast, and brightest display, reimagined page turns, and all of the features customers love about Kindle — books in seconds, no eyestrain or glare, readability in bright sunlight, and battery life measured in weeks, not hours.”
They also introduced the all-new Fire HD, “the most powerful tablet under $100” and the Fire HD Kids Edition (US only), built from the ground up for kids and parents, and featuring a 2-year, no questions asked ,’worry-free’ guarantee. At the high-performance end, the all-new Fire HDX 8.9, combines “a startlingly light design and stunning HDX display with a new, more powerful processor, exclusive Dolby Atmos and the latest Dolby Audio, and the all-new Fire OS 4 ‘Sangria,’ Amazon’s next-generation software and services that power Amazon Fire devices.”
Jeff Bezos is known for saying that he’s more interested in growth than profit at this phase of the company’s development. However, these latest results are sure to be of concern to investors, and may reveal the limits of their patience.