Amazon’s Q3 financials: net sales up 20%, operating loss half a billion higher
I think you know the basic story by now.
Amazon is selling more…a lot more.
Amazon is losing more…a lot, lot, lot more.
However…they gained more in sales than they lost in, well, losses.
You can see numbers in this
and you can listen to the webcast here:
Compared to the same quarter last year:
“Net sales increased 20% to $20.58 billion in the third quarter, compared with $17.09 billion in third quarter 2013.”
“Operating loss was $544 million in the third quarter, compared with operating loss of $25 million in third quarter 2013.”
So, net sales were up $3.49 billion, while the operating loss was $.519 billion.
Looking at this, it looks good…but it’s scary to see losses more than twenty times higher.
Looking through the slides, it just looks bad…the “loss” slides are so dramatic!
During the question and answer session, Amazon sounded…resigned to what was happening. The investors asking the questions sounded…concerned. They were looking for something to explain the slide, but to me, not expecting to find it.
The lack of media sales growth seemed to be a particular concern. Amazon was suggesting that a shift from purchasing to renting (textbooks), for example, was a contributing factor. Give me an argument for why that is going to reverse going forward?
I’m listening to the Q&A as I write this, and sometimes, the Amazon representative just seems to trail off when answering a question.
Amazon is undeniably investing a lot of money…launching hardware, licensing content, creating their own content. Is that going to slow down, though? Is it becoming the expected thing for Amazon, and if they stop doing it, will that take some of the shine off the company for the average consumer?
I want to be clear, I’m not especially concerned about Amazon from this report…it’s kind of more of the same, even if the losses are up so much.
They are smart, and I think very focused. I expect Amazon to be around twenty years from now, certainly.
I have more concern with them losing customer goodwill…that’s what they need to have to continue to succeed.
In terms of the highlights in the press release, this stood out to me:
“Amazon Fire TV is now the best-selling streaming box on Amazon for the U.S., U.K., and Germany”
is a good device: I use mine every day.
looks to be a hit (they are having to restrict buying) and I think the new
will also do well.
Not so much.
I have one, and I see them advertising them a lot…but it may be a couple of years before we know if it will really get a solid slice of the market.
Amazon mentioned they had $83 million in Fire Phone inventory on hand…that’s not where they want to be. They are giving them away right now (with a plan)…and it sounds like people still aren’t going for it.
The Fire tablets, though, appear to be solid sellers.
All of this is only a small part of Amazon’s business (web services and fulfillment for others are two significant segments)…but a very large part of the public perception of the company.
They did confirm what I’ve been saying…content can be sold at a loss if it makes people Prime members, because Prime members buy what I call “diapers and windshield wipers”…the higher margin physical goods.
Lots of stories on this, generally negative towards Amazon (with a few exceptions). Here’s a search at Seeking Alpha:
Notably, Seeking Alpha also has a transcript of the call…so you don’t need to listen to it to get the literal content (although the emotional content from hearing it is still interesting:
What do you think of this financial report, and of Amazon’s future in general? Will the stock tank (temporarily) based on these figures? Does Amazon need to change something significant, or is this all according to plan? Feel free to tell me and my readers what you think by commenting on this post.
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