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Amazon makes $126 million net loss while Q3 looks even worse

Amazon has announced its second quarter earnings, and they don’t make pretty reading for investors. They’re not set to improve any time soon, either.

The company was typically vague when it came to precise sales and usage figures, but certain the financial numbers were plain for all to see.

Amazon has made a $126 million net loss over the past three months. That’s the biggest since 2012, and is almost twice what analysts predicted them to be.

This loss comes despite revenues increasing 23 percent to $19.3 billion. With operating expenses rising by an almost identical amount – 24 percent at $19.4 billion – you might question how positive that is.

Of course, launching a smartphone is an expensive business. The development and manufacturing costs of the Amazon Fire Phone were always going to hit even a company as rich as Amazon in the pocket.

With the company selling its new camera-laden phone at near cost price, there’s unlikely to be an immediate return from its investment – even if the sales numbers prove to be spectacular.

Indeed, the company’s third quarter guidance looks even more grim. Amazon predicts a huge operating loss of  between $410 million and $810 million over the coming months. Compared to last year’s figure of $25 million, that’s quite a drop.

Again, this is clearly tied to the cost of launching a new smartphone, so shouldn’t be taken as a sign of the online retail giant’s impending doom. The Fire Phone only launched today on one US network, so the company will be looking to ramp up production and expand over the coming months.

As Jeff Bezos says, “today customers all over the U.S. will begin receiving their new Fire phones — including Firefly, Dynamic Perspective, and one full year of Prime — we can’t wait to get them in customers’ hands.”

Amazon also notes that its other big recent launch, the Amazon Fire TV, has “significantly exceeded our sales forecast,” prompting the company to increase its manufacturing output. 

All expensive but potentially rewarding stuff, though Amazon’s investors may be struggling to reconcile the two this morning.

Read More: Amazon Fire TV vs Apple TV

Via: The Verge

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