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Amazon reports $437 million Q3 loss


Wall Street has tolerated Amazon’s excesses for a long time, but a much larger than expected third quarter loss and tepid fourth quarter outlook was more than the company’s most ardent supporters could stomach.

Shares of the company tumbled more than 10% after hours Thursday when Amazon posted a huge loss on sales that increased 20% to $20.6 billion during the period ended Sept. 30. The net loss for the period was $437 million, or 95 cents a share, compared with net loss of $41 million, or nine cents a share, the prior year. Analysts expected the company to lose money, but the consensus estimate was “only” 73 cents. To make matters worse, the company said it expected fourth quarter sales to range from $27.3 billion to $30.3 billion, a range below analysts’ estimate of slightly more than $31 billion.

The bigger than expected loss and fourth quarter guidance caused shares of Amazon, which began the year above $400, to hit a 52-week low in after hours trading on Thursday when they sank to $279.80.

As in prior quarters, Amazon continued to invest in long term growth with little regard for current profitability. For example, fulfillment expenses increased 30% to more than $2.6 billion, marketing costs surged 43% to $993 million and technology and content expenses increased nearly 40% to more than $2.4 billion.

Amazon founder and CEO Jeff Bezos, who typically doesn’t comment on the company’s financial performance, held true to form in a statement announcing third quarter results.

“As we get ready for this upcoming holiday season, we are focused on making the customer experience easier and more stress-free than ever,” Bezos said. “In addition to our already low prices, we will offer more than 15,000 Lightning Deals with early access to select deals for Prime members, hundreds of millions of products across dozens of categories, curated gift lists like holiday toy list and electronics holiday gift guide, new features like #AmazonWishList, and a great new lineup of products like Kindle Voyage and Fire HD Kids Edition. And if you order your gifts on AmazonSmile, we’ll donate a percentage of your purchase price to your favorite charity.”

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