Amazon reports lower profits and issues loss warning

Published:  1 Feb at 6 PM

Internet retailer Amazon has announced a dramatic drop in profits and warned of worse than anticipated results this year.

For the three months ending 31 December, net income at the online giant was $177m (£144m), plummeting from $416m a year earlier. The fall came despite revenues during the period increasing by 35 per cent to $17.43bn. But the firm warned that it could lose money during the opening quarter of 2012 as it continues its investment drive.

The technology giant’s shares dropped by over eight per cent upon the news as investors responded to the downbeat forecasts, reported the BBC. Credit Agrocole analyst James Lee explained that Amazon is an expensive stock, so any kind of disappointment usually sees a fairly meaningful market reaction.

The company said that sales in the US of the Kindle, its e-book readers, jumped during the nine weeks leading up to 31 December, delivering a 177 per cent increase on the year before. The sales surge comes at the same time as the US release of the retailer’s new touch screen tablet, the Kindle Fire.

Amazon.com’s CEO Jeff Bezos said that they are grateful to customers who bought the Kindle e-reader and Kindle Fire devices over the festive period, making Kindle Amazon’s bestselling product in Europe and the US. The firm forecast that sales would continue to rise, but warned that making profit may be tough due to its investment drive.