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Amazon Results, Outlook Fall Short of Expectations

CNBC.com with Reuters
Thursday, 25 Oct 2012 | 5:09 PM ET

Amazon.com reported a larger-than-expected quarterly loss on Thursday as it spends heavily to expand existing operations and develop new businesses. Its outlook also fell short of expectations.

The online retailer's shares ell in trading after the closing bell. (Click here to get real-time quotes for Amazon.)

Amazon reported a net loss of $274 million in the third quarter, or 60 cents per diluted share, compared with net income of $63 million, or 14 cents a share, in the period last year.

Part of the loss related to an impairment charge from Amazon's investment in daily deal company LivingSocial.

Excluding items, Amazon reported a loss of 23 cents per share, down sharply from a profit of 14 cents a share in the same period a year earlier.

Revenue jumped 27 percent to $13.81 billion from $10.88 billion a year ago.

But the results missed analyst estimates: Wall Street had expected Amazon to report a loss excluding items of 8 cents a share on $13.92 billion in revenue, according to Thomson Reuters consensus estimates.

Amazon Q3 Revs: $13,81 Billion vs. $13.92 Billion Est.
CNBC's Maria Bartiromo reports Amazon's quarterly earnings, with Dan Morgan, Synovus Trust; Gary Shilling, A. Gary Shilling; Ben Pace, Deutsche Bank Private Wealth Management; and CNBC's Jeff Cox.

"The overriding theme, the shift to third party, is making the revenue number less meaningful. I think revenue is not indicative in figuring out the future profitability of the company," said Jason Helfstein, an analyst at Oppenheimer.

For the fourth quarter, Amazon said it expects revenue of $20.25 billion to $20.75 billion, shy of the $22.79 billion analysts currently expect.

"On the surface it looks pretty weak, (and there are) pretty significant FX (foreign exchange) headwinds," said Needham analyst Kerry Rice. "If you add that back on the top line it looks roughly better-than-expected, but much lower earnings on a GAAP basis. I assume it's likely a result of continued investment in fulfillment centers."

The earnings release also hyped Amazon's signature product, the Kindle, and made numerous comparisons to the iPad mini, Apple's just-released challenger. CEO Jeff Bezos said Amazon's breakeven approach is working, and that the Kindle Fire HD is its best-selling product across the site worldwide, though he gave no specific sales figures.

"Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point," Bezos said in the press release.

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