Amazon records first net loss in nine years

Amazon.com made a net loss in the third quarter, its first loss in nine years, even as revenue increased by 27 percent year on year.

The US$274 million third-quarter loss compared with a net profit of $63 million a year earlier. Net sales grew to $13.8 billion from $10.9 billion a year earlier, Amazon said Thursday.

A large chunk of the net loss, $169 million, was related to the company’s investment in online deal site LivingSocial, it said. At the same time total operating expenses increased from $10.8 billion to $13.8 billion.

Amazon is now in the process of rolling out its new family of Kindle tablets and e-readers. The Kindle Fire HD, a tablet with a colour screen running Android, is Amazon’s bestselling product worldwide, followed by the new Kindle Paperwhite e-reader and the $69 Kindle, the company said.

CEO Jeff Bezos has high hopes for the Kindle range, and said the best is yet to come: A version of the Kindle Fire HD with an 8.9-inch screen will go on sale on Nov. 20.

The new Kindles will face stiff competition during the holiday shopping season, thanks to the arrival of the iPad mini and more Nexus tablets from Google. The latter are expected to be announced on Oct. 29.

Amazon needs a boost. It hasn’t reported a quarterly net loss since the third quarter of 2003, according to Thomson Reuters, and the company’s outlook for the next quarter is uncertain.

Despite predicting fourth-quarter net sales will rise by between 16 percent and 31 percent year on year, Amazon said the $260 million profit it made in the fourth quarter last year could almost double — or turn into a $490 million loss. The company’s results are inherently unpredictable, it said, because of fluctuations in consumer spending, exchange rates and Internet growth.

Amazon’s North American segment sales — which includes retail sales of consumer products and subscriptions through North America-focused websites as well as money made from Amazon Web Services (AWS) — were $7.9 billion, up 33 percent from the third quarter last year.

International segment sales were up 20 percent year-on-year, and totalled $5.9 billion.