Amazon just reported profits of $63 million for the third quarter, down 73 percent. The profit of 14 cents a share was significantly below Wall Street’s estimates, sending the company’s shares tumbling in after-hours trading.
In the earnings news release, CEO Jeff Bezos said Amazon has seen strong demand for the company’s new Kindles and Kindle Fire tablet.
“In the three weeks since launch, orders for electronic ink Kindles are double the previous launch. And based on what we’re seeing with Kindle Fire pre-orders, we’re increasing capacity and building millions more than we’d already planned,” he said.
One question going forward will be the impact of the Kindle Fire on the company’s bottom line, particularly as the new tablet device launches next month. At $199, Amazon is reportedly selling the device at a loss.
In the third quarter, the company’s net sales were up 44 percent to $10.88 billion, but profits were down 73 percent to $63 million, as operating expenses rose to $10.8 billion, from $7.3 billion in the same quarter last year.
Analysts polled in advance by Thomson Reuters expected the company to post earnings per share of 24 cents on net sales of $10.95 billion.
For the current quarter, Amazon says it expects net sales between $16.45 billion and $18.65 billion, growing between 27% and 44%, but the company gives a huge range for 4Q operating income, ranging from a $200 million loss to a $250 million operating profit.