With its roots in online retail, Amazon.com isn’t a traditional technology company, which means that its profit margins are much lower than many others in the tech sector. But as the company prepares to release its quarterly results on Thursday afternoon, it’s increasingly testing the patience of investors looking for a better bottom line.
Amazon said previously that it could post anything from a $200 million loss to a $100 million profit for the quarter — despite the fact that net sales are expected to grow at least 22 percent to $12.0 billion, on the low end of the range.
The company’s challenges include heavy investments in its Kindle Fire. It’s selling the tablet at or near a loss in hopes of making up the difference over time through digital media sales and subscriptions — not an easy task, given the competition from Netflix, Hulu and others.
Amazon has also been expanding significantly, adding distribution centers and growing to more than 56,000 employees worldwide as of the end of last year, doubling in size over the past two years.
Among other factors: Rising shipping expenses are also an issue for the company, and analysts point out that tough times in areas including video games could put a dent in key areas of the company’s retail sales.
Wall Street expects Amazon to post sales of $12.9 billion for the quarter, up 31 percent over the same quarter last year, but the company’s earnings per share are expected to fall 84 percent to 7 cents.
We’ll be watching closely for clues about the state of the broader Kindle lineup, but Amazon has made a habit of giving only general statistics about Kindle growth, without divulging specific sales numbers.
Amazon reports results after the market closes on Thursday afternoon.
