Today marks the first day of Amazon’s new entry into the smartphone industry and hopes are high for Jeff Bezos that it will be a success. This week also saw the numbers for the second quarter for Amazon and it’s once again a “good news, bad news” scenario. According to GeekWire.com who shared the story off the business wire:
Amazon just reported net sales of $19.34 billion for the second quarter, an increase of 23 percent, in line with analysts’ expectations for the Seattle-based company.
However, the company’s quarterly loss of $126 million, or 27 cents a share, is 12 cents worse than the loss of 15 cents loss that had been predicted by analysts polled in advance by Thomson Reuters.
The story of Amazon’s rise to cyber retail dominance started, as you may remember, with books. The idea though seems to have always been to expand and offer more and more product. Amazon now is a go to shop for nearly any and all things you can buy from food to gardening supplies and more importantly, technology and digital content. Starting with Amazon’s Kindle product paving the way for digital publishing and e-books, the company is constantly researching and marketing new ideas in technology looking for what’s hot in the market. They have had recent success with the launch of their Fire TV product for instance which competes with Apple TV and Google TV. Apparently, hardware production is to be increased to meet demand which is a sign their gamble is paying off.
But the sales numbers tell the other side of the story as all this investment in technology and hardware eat quite heavily into the profits generated from solid sales numbers. Shares of the company’s stock were down by the closing bell as investors react to Amazon’s lack of profitability. Bezos mentioned in the statement release:
“We continue working hard on making the Amazon customer experience better and better. We’ve recently introduced Sunday delivery coverage to 25% of the U.S. population, launched European cross-border Two-Day Delivery for Prime, launched Prime Music with over one million songs, created three original kids TV series, added world-class parental controls to Fire TV with FreeTime, and launched Kindle Unlimited, an eBook subscription service. For our AWS customers we launched Amazon Zocalo, T2 instances, an SSD-backed EBS volume, Amazon Cognito, Amazon Mobile Analytics, and the AWS Mobile SDK, and we substantially reduced prices. And 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.”
In the past, Bezos and Amazon haven’t been forthcoming with impact in their financial reports directly related to specific hardware so we’ll just have to wait and see how the Fire smartphone pays off. Meanwhile, investors are seemingly betting on Amazon not winning.
What do you think? Do these financial issues spell doom for Amazon? Or are they merely a bump in the road? Let us know what you think in the comments below, or on Google+, Facebook, or Twitter.Source: GeekWire