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Retail

Amazon posts losses despite revenue spike, shares suffer

Online retail giant Amazon has reported a remarkable boost in sales for the second quarter, but still posted a nine-figure net loss. The company cited investment for the future, shareholders responded skeptically.

Shares in Amazon.com took a 10-percent tumble in after-hours trading after the e-commerce retail giant reported some rather counterintuitive second quarter figures.

The Seattle-based firm posted a net loss of $126 million (93.5 million euros), or 27 cents per share, for the quarter, compared to $7 million in the same period last year. Simultaneously, Amazon reported a 23-percent year-on-year bump in revenue, to $19.34 billion.

Amazon put the losses down to key strategic investments, such as its own smartphone, the recently-unveiled Fire, and developments for its customer loyalty program, Prime.

"We continue working hard on making the Amazon customer experience better and better," founder and chief executive Jeff Bezos said in the earnings release.

Seeing spending shadow?

Investors have traditionally shown patience with Amazon's aggressive reinvestment strategies. But after Thursday's announcement, shares bottomed out at $318.00 in after-hours trading, having closed out the day at around $360. However, Amazon stock had traded bullishly in recent weeks; the NASDAQ shares stood well below the $300-mark as recently as May.

"I feel like this is 'Groundhog Day' over and over again," Forrester analyst Sucharita Mulpuru told AFP, a reference to a comedy starring American actor Bill Murray as a weatherman perpetually reliving the same day. "I don't know how much longer it can keep going."

Mulpuru said the argument for investment in future innovations was difficult to swallow, considering the ability of rival US giants to post profits despite high spending on research and development.

"Apple created the iPad; Google has Fiber, Glass and driverless cars and they are still pulling a profit," Mulpuru said. "So what's Amazon's excuse?"

Some analysts, Mulpuru included, have suggested that another part of Amazon's long-term strategy is to solidify their market share by accepting low profit margins, in the hope of raising prices and returns after eliminating some of its high-street retail competition.

msh/pfd (AFP, AP)

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