Amazon profit plunges with breakneck investment in global expansion

Amazon profit plunges with breakneck investment in global expansion

Amazon also said it could lose up to $400 million (Rs 2,569 crore) in operating profit during the July-September quarter.

The steep decline was reportedly caused by Amazon's rapidly decreased investment into new shopping categories, including video, as well as into global expansion.

The company's shares, already up almost 41% this year, were down 3% at $1,014.75 in after-hours trading.

On the heels of its expected $13.7 billion acquisition of Whole Foods, Amazon is continuing to look at innovation in the grocery space, including through its Amazon Go checkout-free store (still in beta), physical pick-up points and Amazon Fresh delivery.

On a call with analysts, Chief Financial Officer Brian Olsavsky noted that marketing expenses are up, driven primarily by an increase in headcount for the company's sales team. He added that their video content along with Amazon Prime membership has helped the company retain subscribers, and persuade those who held a free trial to opt for a paid subscription.

The industry-leading cloud service generated $14.5 billion in sales over the last 12 months, Amazon said. Or are they just a bid to get more people to buy into Prime and your device ecosystem?

Listing the company's achievements in the last few months, he said Amazon had: launched Echo Show, its newest Echo device; introduced calling and messaging via Alexa on all Echo devices; and debuted Inside Edge on Prime Video - the first of 18 Indian Original Series. "We are giving them the benefit of doubt here because they have executed so well historically". Analysts had expected operating income in the third quarter of $931 million, according to FactSet StreetAccount.

Operating expenses rose 28.2% to US$37.33bil (RM159.7bil) in the second quarter ended June 30.

Despite seeing growth in AWS, TechMarketView analyst Kate Hanaghan pointed out that AWS' quarter-on-quarter revenue growth has been shrinking for some time.

Despite this revenue growth of 25% across the company, of which a significant amount came from its services business, including Amazon Web Services (AWS), its overall performance has not met expectations due to high costs bringing profits way down.



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