Amazon reported one of the biggest losses in its history and admitted that some of its investments had not gone well as it vowed to be “selective” about where it put its money in future.
The ecommerce group’s shares plunged 11 per cent in after-hours trading on Thursday, after news of a $437m loss in the three months to the end of September sharpened questions about its ability to generate long-term profits.
Under pressure from analysts on a conference call to discuss its quarterly figures, Amazon’s chief financial officer struck a tone that was contrite by the standards of a company that usually says as little as possible.
“With anything new that we do . . . there’s certainly a wide range of outcomes,” said Tom Szkutak, Amazon’s finance chief, when asked about its investments in hardware and overseas markets including China.
“We try to learn from everything that we do as we launch new opportunities. So that’s . . . across things that go great and things that don’t go as well as others.
But losses that exceeded Wall Street expectations have caused its shares to drop by close to or more than 10 per cent after each of the past four quarters’ earnings announcements.
Mr Szkutak said: “There’s still lots of opportunities in front of us, but we know we have to be very selective about the opportunities we pursue.”
Amazon bulls have long argued that it will be able to convert its fast-growing customer base into higher profits at the moment it chooses.
But as the strength of that conviction has waned in recent quarters, Amazon’s shares have been among the worst performers in the S&P 500, falling more than 21 per cent since the start of the year.
Amazon’s international business has been the main source of its losses: it had a negative operating margin of 0.4 per cent in the past quarter versus a positive 4.3 per cent margin in its North America business.
Mr Szkutak attributed that partly to the funds it is ploughing into new infrastructure in China, India, Italy and Spain.
“We understand that we do have to get leverage over time, but we are investing right now,” he said.
Amazon’s net loss worked out at 95 cents per share, worse than the 74 cents Wall Street expected.
The company reported a 20 per cent increase in quarterly net sales to $20.6bn, a rate of growth that is still the envy of big bricks-and-mortar retailers.
But its sales figures were also a cause of minor disappointment to the market, as they fell $200m short of analysts’ expectations.
In after-market trading following its results, Amazon shares were down 11.1 per cent to $278.50.
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