(Associated Press via NewsEdge) Amazon.com said second-quarter earnings plunged nearly 58% as the online retailer focused on giving customers cheap or free shipping deals and investing in new technologies.
Amazon.com shares fell more than 12% in after-hours trading as the online retailer also said it planned to invest heavily in its new toy sales strategy and cut prices on many products.
The latest spending plans left some wondering when the investments would pay off.
"In some respects, it's kind of one thing after another," said Dan Geiman, an analyst with McAdams Wright Ragen.
But analyst Bob Toomey with E.K. Riley Advisors said the hefty investments were consistent with how Amazon.com operated.
"People who follow the stock closely know or should know that Amazon's strategy is and has been to be investing in the business for the long term," he said.
For the three months ended June 30, the company reported a profit of $22 million, or $0.05 per share, compared with earnings of $52 million, or $0.12 per share, in the same period a year earlier.
In a conference call, Amazon.com CFO Tom Szkutak said net income was hurt by approximately $10 million because of the termination of a contract with Toys R Us. Sales for the quarter were $2.14 billion, a 22% increase over the $1.75 billion a year earlier. The company said sales would have grown 23% if not for the negative effect of foreign exchange rates.
Analysts polled by Thomson Financial were expecting second-quarter earnings of $0.07 per share on revenue of $2.1 billion.
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