Amazon 3Q net income declines

Online retailer Amazon is spending a lot to grow its business, and while this will eventually help its bottom line it’s costing the company on Wall Street.

The Seattle-based company’s earnings fell short of analyst expectations Tuesday, sinking 73 percent despite revenue growth as Amazon built sales fulfillment centers at a rapid clip this year. And its revenue outlook for the current quarter failed to impress investors. Inc. earned $63 million, or 14 cents per share, in the third quarter. This compares with $231 million, or 51 cents per share, a year earlier. Analysts polled by FactSet had hoped for much more: 24 cents per share in net income.

Revenue climbed 44 percent to $10.9 billion, in line with the nearly $11 billion analyst were looking for.

The company’s media business, which includes products like books, CDs and DVDs, saw revenue rise 24 percent to $4.2 billion. Amazon’s revenue from electronics and other general merchandise rose 59 percent to $6.3 billion.

But Amazon’s operating expenses also climbed, rising 48 percent to $10.8 billion. The increase came mainly from a higher cost of sales. This is the third consecutive quarter in which Amazon’s expenses have cut into its bottom line.

Amazon CEO Jeff Bezos also gave some details about the health of the company’s family of Kindle e-readers. In Amazon’s earnings release, Bezos said that Sept. 28 was the Kindle’s “biggest order day ever.” That day, Amazon trotted out several new Kindle models, including its first-ever tablet computer, the $199 Kindle Fire. Amazon began selling a $79 model and took advance orders for others.

The Fire, which will begin shipping in November, is Amazon’s answer to Apple’s popular iPad. Bezos said advance orders for the Fire are so high that Amazon is making “millions more” than it had intended.

Amazon’s stock sank $42.31, or 17.8 percent, to $195.30 in after-hours trading. The stock had fallen $10.46 to finish regular trading at $227.15.

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