Sat, Oct 27, 2012 - Page 15 News List

Amazon swings to loss on operating costs and writeoffs

POSITIVE SPIN:Jeff Bezos said Amazon remained committed to delivering value through its retail marketplace, digital content and Kindle tablets

AFP and bloomberg, NEW YORK

Amazon on Thursday said it swung to a loss in the third quarter, as the Internet retail titan was hit by higher operating costs and a big writeoff, in results sharply below Wall Street expectations.

Amazon reported a loss of US$274 million in the quarter, compared with a profit of US$63 million in the same period a year ago.

Excluding special items, the loss amounted to 23 cents a share, worse than forecasts of a loss of US$0.08 per share.

Revenues in the period rose 27 percent to US$13.8 billion, but fell short of analyst forecasts of US$13.9 billion.

The disappointing results showed a sharp rise in operating expenses including cost of sales, marketing and technology.

Amazon also reported a writedown of US$169 million for its stake in online deals group LivingSocial, under accounting rules requiring a charge against earnings to reflect the lower estimated value of the company.

Founder and chief executive Jeff Bezos said Amazon remained committed to delivering value to customers through its retail marketplace, digital content and its Kindle tablets.

“Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point,” Bezos said.

“And our approach is working — the US$199 Kindle Fire HD is the No. 1 bestselling product across Amazon worldwide,” Bezos said.

“Incredibly, this is true even as measured by unit sales,” he said.

Amazon has ramped up its efforts in the tablet segment, as part of a move to keep customers in the company’s orbit for ebooks, music and other forms of digital content, challenging the popular iPad from sector leader Apple.

Amazon maintained that its new large-format Kindle Fire HD, which hopes to compete with the large iPad, “has 193 percent more pixels,” superior audio and costs less than its Apple rival.

The company said the seven-inch Kindle Fire HD has similar advantages over the iPad mini unveiled earlier this week by Apple.

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