Amazon’s share price falls 6% on quarterly results

Amazon’s share price fell 6% in after-hours trade after the firm reported a second-quarter net loss of $126m and warned that sales could slow in the current quarter.

In line with analysts’ predictions, net sales increased 23% to $19.34bn, compared with the second quarter of 2013, but Amazon expects third-quarter sales of $19.7bn to $21.5bn, which means sales growth of 11% at best in the current quarter.

Operating loss was $15m in the second quarter, compared with operating income of $79m in the second quarter of 2013 and $146m in the first quarter of 2014.

Analysts said operating income is regarded as a good measure of profitability and investors have traditionally disregarded narrow profit margins, looking instead at strong sales growth for reassurance.

“We continue working hard on making the Amazon customer experience better and better,” said Jeff Bezos, founder and chief executive of Amazon.

He highlighted several innovations, including European cross-border two-day delivery for Prime customers, new cloud-based services and price reductions, and the launch of the Fire Phone.

Amazon’s first smartphone is among the big investments the firm has been making to grow its business, but which have contributed heavily to the net loss in the second quarter.

In a results conference call, Amazon revealed that producing its own TV shows will cost $100m in the third quarter, reports the BBC.

Amazon has also been spending money on improving its cloud-computing services and delivery systems, including expanding Sunday delivery to some cities in the UK and the US.

But analysts said the size of the shares sell-off indicates some investors want more reassurance, particularly as Amazon does not break down its numbers to show how its different products are performing.

At the end of the first quarter, analysts said Amazon’s share price was unlikely to make any significant gains until the company can prove that its recent innovations are turning a profit.