Amazon Ships Q2 Earnings That Are Light on Profit

Amazon has failed to meet second-quarter expectations as it continues to invest heavily in content, hardware and its core e-commerce business.

Immediately following the release, shares are sliding in after-hours trading, falling nearly 6 percent, or $12.93, to $207.17 a share.

The company said net sales increased 29 percent to $12.83 billion in the second quarter, compared with $9.91 billion in the same period a year ago. When you take away the impact from foreign exchange, Amazon said revenues would have increased 32 percent.

Operating income totaled $107 million, compared to $201 million in the year-ago period — also negatively impacted by foreign exchange rates.

But more noticeable was the dramatic drop in net income, which fell 96 percent to $7 million, or one cent a share, compared to net income of $191 million, or 41 cents a share a year earlier. Results include a $65 million net loss related to the acquisition of Kiva Systems, which makes robots for moving merchandise inside warehouses.

Wall Street analysts were expecting Amazon to report $12.91 billion in revenue during the second quarter, which breaks down to operating income of $250 million and a profit of two cents a share.

The e-commerce giant broke down the company’s revenue into four sectors:

North American sales: Up 36 percent to $7.33 billion.
International sales: Up 22 percent to $51.1 billion.
Worldwide Media sales: Up 13 percent to $4.12 billion.
Worldwide Electronics and Other General Merchandise sales: Up 38 percent to $8.16 billion.

In the third quarter, the company offered a conservative forecast, estimating that net sales would fall between $12.9 billion and $14.3 billion, representing 19 percent to 31 percent growth, and an operating loss between $350 million and $50 million, down from $79 million in the comparable prior year period. (Guidance includes $275 million in stock-based compensation.)

Last week, eBay stock hit a new 52-week high after it easily beat analyst expectations for the second quarter despite economic uncertainty in Europe.