There is gloom at the online book seller Amazon after the company reported its first net loss in ages.
The loss was because the outfit spent a fortune and suffered from an economic slowdown in Europe.
Its third-quarter net loss was $274 million, opposed to a $63 million profit during the same time last year. Part of the loss was because of an impairment charge from Amazon’s investment in LivingSocial.
Third quarter revenue was $13.81 billion, which was up 27 percent from a year earlier.
Amazon has not reported a quarterly net loss since the third quarter of 2003.
According to Reuters, things are not likely to get better quickly. Amazon thinks that the crucial fourth-quarter holiday shopping period will be much lower than the cocaine nose jobs of Wall Street predict.
Christmas will be difficult. Typically a time of frenzied buying, Amazon faces more competition from ever before, and paired with lousy economic conditions in the west, this could spell trouble for the quarter. Big retailers are rolling out plans to match Amazon’s prices online, and in the US, Walmart is experimenting with same day deliveries over the holiday period.
Amazon has spent heavily on new distribution warehouses and technology to support its cloud-computing business, Amazon Web Services. It is also investing hundreds of millions of dollars a year on digital content to sell through its Kindle tablets and e-readers.
This quarter the company spent $1.51 billion on shipping and warehouses, up from $1.12 billion a year earlier. Technology and content spending reached $1.19 billion, up from $769 million in the same period last year.