Amazon's losses push shares lower, new smartphone gets 'mehh' reaction

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Amazon's losses push shares lower, new smartphone gets 'mehh' reaction

Amazon's losses push shares lower, new smartphone gets 'mehh' reaction
Text size Aa Aa shares fell further following a much larger-than-expected quarterly loss due to major investment in new businesses, including digital content and consumer electronics.

Revenue jumped 23 percent in the quarter but it posted a net loss of $126 million (94 million euros) as heavy investing hit its bottom line.

The company’s first ever smartphone, the Fire, has just started shipping in the US.

The handset features a number of “gimmicks” – such as 3D effects and an object scanner linked to its online store – but reviewers criticised its battery life and a lack of popular apps. It is also available only on one network there – AT&T.

The phone is part of the effort by the biggest online retailer in the US to take on major technology rivals including Apple, Google and Netflix.

New products and businesses unveiled this year include a subscription book service, new digital content for its Prime online video service, a TV streaming-box as well as the Fire smartphone.

Chief Financial Officer Tom Szkutak admitted its investments were “certainly impacting short-term results” but added Amazon has a “tremendous amount of opportunities”.

The company is spending more than $100 million (74.5 million euros) on original video content in the third quarter, a substantial increase compared to last year and the second quarter, Szkutak said.

“We’re going to continue to invest on behalf of customers with the understanding that long-term has to come,” he said during a call with reporters. “We’ll obviously be looking to get great returns on investor capital and high amounts of cash flow.”

Investors remain wary of betting on its long-term growth at the expense of little to no profit.

with Reuters