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Thursday, October 25, 2012

Tech / Books / Money Amazon.com Takes a Hit in the Third Quarter

Posted by Paul Constant on Thu, Oct 25, 2012 at 1:56 PM

The press release is right here, but the important takeaway comes from parislemon:

[Amazon.com] lost $274 million on sales of $13.81 billion. Yes, you read that right.

On the bright side for the company, that probably means Amazon sold a whole bunch of Kindles last quarter.

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Comments (11) RSS

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Amazon's investing massively in cloud services infrastructure. That's probably all this is.

Posted by Chip on October 25, 2012 at 2:13 PM

@1, that would hit the balance sheet as a capital improvement and affect cash on hand (converting one asset into another asset) but it wouldn't affect the P&L since you don't expense capital improvments such as the cloud services infrastucture.

Capital improvements would be expensed only as a depreciation expense and then over the long term life of the capital expendeture

Posted by Cato the Younger Younger on October 25, 2012 at 2:30 PM

That being said, they are selling the Kindles at a loss, (they are not generating enough immediate revenue to offset the COGS (cost of goods sold) for the number of Kindles they have already sold. Given the fact they have a long wait (three weeks) to get a Kindle to a customer they are accounting for the sale on the books at the time of purchase; not the time of shipment.

Posted by Cato the Younger Younger on October 25, 2012 at 2:32 PM

I am sorry for the super simple accounting answer but as they say knowledge is power.

Posted by Cato the Younger Younger on October 25, 2012 at 2:38 PM

And they're being hacked pretty badly.

Posted by Will in Seattle

on October 25, 2012 at 2:39 PM

All that Amazon Prime two-day shipping can't help. I'm betting that most people who pony up the $79 per year are getting way more than their money's worth out of it.

Posted by pbelamy on October 25, 2012 at 3:15 PM

Um, children, I'm no fan of Amazon, especially Kindle. But they are kicking ass as a business.

Posted by Mister G on October 25, 2012 at 3:15 PM

@6,

You can already get free (slow) shipping. How much is two-day shipping compared to ground? Free super saver is also frequently shipped via USPS, not UPS.

Posted by keshmeshi on October 25, 2012 at 3:43 PM

Makes even less sense they would splurge on an expensive $1 billion campus in overcrowded Seattle down town.

Investors should be irked.

Posted by Supreme Ruler Of The Universe

on October 25, 2012 at 4:09 PM

@6 I'm sure Prime makes back more than its cost, or they (okay, we*) wouldn't keep it going, much less pile on more features (Prime video).

It leads to a lot more add-on sales, and purchases in departments customers wouldn't normally go to Amazon for.

(*) I have no knowledge of the actual internal financials. It's just my personal impression.

Posted by madcap on October 26, 2012 at 12:32 AM

@9 I'm sure that property values of the SLU campus aren't going to be taking a nose dive any time soon.

Posted by madcap on October 26, 2012 at 12:37 AM