DOW JONES NEWSWIRES
Amazon.com Inc.'s (AMZN) third-quarter earnings plunged 73% because of its expensive spending program, as the No. 1 Internet retailer by sales said it could report an operating loss in the key fourth quarter.
Shares slid 14%, at $195.50 after hours. The stock hit its highest level ever last week and had since fallen 7.9% through the close.
Amazon, which has been investing aggressively in distribution and digital offerings at the expense of the bottom line in recent quarters, said the fourth quarter's bottom line could range from an operating loss of $200 million to a operating profit of $250 million. The fourth quarter includes the key holiday-shopping season.
The company also projected $16.45 billion and $18.65 billion in revenue in the current quarter. Analysts on average expected $18.15 billion, according to a survey by Thomson Reuters.
In the latest period, operating expenses jumped 48%, outstripping the pace of revenue growth. The company has posted double-digit percentage increases in expenses for over a year.
Amazon posted a profit of $63 million, or 14 cents a share, from $231 million, or 51 cents a share, a year earlier. Analysts predicted 24 cents a share.
Net sales increased 44%, to $10.88 billion. Excluding currency effects, the growth would have been 39%. In July, the company predicted $10.3 billion to $11 billion, largely better than analysts expected at the time.
Gross margin was flat, at 23.5%, but the margins of fulfillment and overhead costs to sales both weakened.
Operating income dropped 71%. In July, Amazon predicted operating income could fall as much as 93%.
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