Amazon reports an even bigger loss as Bezos expansion goes on; some investors 'getting impatient'

Mashable said Investors were "getting impatient." They had shown faith that Amazon's massive revenues would eventually translate into profits.

"With revenue growth slowing and continued struggle to turn a profit, shareholders are beginning to wonder just when Amazon will deliver," said Mashable.

The New York Times pointed out that Amazon had reported a net loss of 27 cents a share. “A year ago it lost $7 million, or two cents a share. Analysts had forecast a loss of 15 cents a share."

The NYT verdict: "Investors were perturbed by the report."

The world’s largest online retailer had a second-quarter loss of $126m wider than the $7m loss a year earlier. This was despite revenue climbing 23 per cent to $19.3bn, matching analysts’ average estimates.

Operating expenses increased 24 percent to $19.4bn, Amazon said in a statement.

Bloomberg points out:”Bezos’s strategy since Amazon’s inception has been to invest heavily to expand and earn customer loyalty...that has been been expensive.

“Amazon began posting quarterly losses in 2012 after being consistently profitable for almost a decade."

However Sucharita Mulpuru, an analyst at Forrester Research in Cambridge, Massachusetts, supported Bezos, “As long as there is money to pour into the business, they will be pouring money in to the business," he said.

“If you can spend down all your profit and nobody is going to penalise you for it, why show a profit?”

The shares of Seattle-based Amazon fell as much as 6.4 per cent in extended trading. The stock advanced less than 1 per cent to $358.61 at the close in New York, leaving it down 10 percent this year.

Amazon’s lack of profits stands in stark contrast to Alibaba Group Holding which has better margins and is planning an initial public offering soon, said Bloomberg.

The Chinese Web retailer disclosed in May that its profit totaled $2.8 billion for the nine months ended Dec. 31 on revenue of $6.5bn. Amazon earned $274m for all of 2013 on sales of $74.5bn.

Still, shareholders continue to back Bezos’s view that big investments are necessary to gain share because Amazon’s business opportunity is enormous and will pay off in the long run.

Amazon is the second-highest valued company in the Standard & Poor’s 500 Index, trading at 573 times earnings and trailing Vertex Pharmaceuticals.

Amazon’s loss in the latest period was the biggest since the third quarter of 2012, when it posted a $274m loss.

Amazon projects sales of $19.7bn to $21.5 billion for the current quarter. Operating losses are projected to be $810m to $410m, Amazon said.

Bezos is spending to take Amazon further away from its roots as an online seller of books, competing with the likes of Apple, Google, Microsoft and Samsung .

Amazon will shortly ship its Fire smartphone, a $199 handset that lets users take a picture of a product to find and buy it quickly from Amazon.

Reviewers have been critical, citing a weak battery, lack of applications and the gimmicky nature of its 3D display.

Still, Bezos has proven with devices such as the Kindle Fire tablet that he’ll stick with a product and continue to invest, even if early models don’t prove popular.