Amazon profit margins slim, revenues up
updated 07:49 pm EDT, Thu July 26, 2012
Undeterred, Amazon will continue investments
The Wall Street Journal carries details today on Amazon's most recent financial reporting, showing that even as revenues for the retailer increase, its profit margins have grown wispy thin. Amazon underperformed versus analyst expectations for the quarter, but company executives say it is in the middle of a transitional period, and it is thought to be preparing a bigger move into the hardware manufacturing sector.
Amazon saw a 96 percent drop in second-quarter profit. For the same quarter last year, Amazon saw $191 million in profits. This year, on revenue of $12.83 billion -- up 29 percent -- the company saw just $7 million in profit. That's due in large part to growth in Amazon's operating expenses, which shot up $3 billion to $12.7 billion in the second quarter.
In addition to increased operating costs from technology and order fulfillment, Amazon is also said to be working to bring out its own smartphone and a line of new Kindle Fire tablets. Possibly to that end, the company has been working to increase its content holdings in order to provide a media library comparable to that seen with Apple's iOS devices. The company's conference call contained no information on any such devices, but Amazon is expected to pull back the curtains from its new products some time later this summer.
Fresh-Faced Recruit
Joined: 12-08-11
I predict a lot of "weeping and gnashing of teeth" for the majority of hi-tech players venturing outside their core competencies in pursuit of the Holy Grail of hardware profit margins.
It's mostly fuelled by profit-lust rather than any clear vision or corporate philosophy, and will not end well unless a change of motive is implemented.