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Loss recorded due to heavy investments carried out by Amazon

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Published on : Jul 25, 2014

Amazon.com Inc has been investing in newer businesses like consumer electronics and digital content, due to which it has been running into losses for some time now. The loss recorded in the second quarter was by far the highest.

In 2014, the stock prices have dropped by 10% with reduced investor confidence in the long term growth investments.

The shares of this US based online retailer fell sharply by another 10% on Thursday and this resulted in a loss per share of about 27 cents. 

In September, the third quarter, an operating loss between $410 million and $810 million was forecasted by the company.

Amazon intends to take on its prominent competitors starting from Google Inc and Apple Inc to Netflix by investing in hardware products.

According to officials at Amazon there were many opportunities in the market for Amazon and that investments did affect the short term outcomes. 

In the third quarter, the company is planning to spend close to $100 million on original video content which is a significant increase as compared to the second quarter and last year. 

Amazon is aiming at generating lucrative returns on investor capital and generating high cash flows.

Some of the significant products launched by the company include digital content for its prime online video service, subscription book services, the forthcoming “fire

smart phone and a television streaming-box.

In early 2014, Amazon had cut prices significantly for its cloud computing service which as a result hindered growth in the “Other” category which mainly includes the Amazon Web Services division.

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