BUSINESS

Amazon.com meets tiny 2nd-quarter profit expectations but revenue comes up short

07/26/2012 04:27 EDT | Updated 09/25/2012 05:12 EDT
SEATTLE - Online retailer Amazon.com Inc. on Thursday reported second-quarter earnings that matched Wall Street's meagre expectations, but its revenue gains and outlook for the current quarter fell short of forecasts.

Net income in the three months to June 30 came to just $7 million, or a penny per share, a drop of 96 per cent from $191 million, or 41 cents, a year ago.

That matched expectations of analysts polled by FactSet, although Amazon said its profit was hurt by a $65 million loss related to its acquisition of Kiva Systems Inc., a warehouse technology company that Amazon agreed to buy in March for $775 million in cash.

Revenue grew 29 per cent to $12.83 billion, short of the $12.90 billion expected by analysts.

However, Amazon said that revenue was negatively impacted by currency movements to the tune of $272 million.

After initially falling, shares rose $3.04, or 1.4 per cent, to $223.05 in extended trading following the release of results.

Sales of digital goods like Kindle e-books, music and movies rose 13 per cent to $4.12 billion while sales of electronics and other items rose 38 per cent to $8.16 billion.

The Seattle-based company said it expects third-quarter revenue to grow between 19 per cent and 31 per cent from a year ago. That amounts to sales of $12.9 billion to $14.3 billion. The midpoint is short of the $14.1 billion expected by analysts.

It also forecast a third-quarter operating loss of $50 million to $350 million.

Chief Financial Officer Tom Szkutak said the projected loss was due in part to investment in the company's fulfilmentcentres ahead of the all-important holiday quarter.