Net profit of Amazon.com (NASDAQ:AMZN), the largest online retailer in the world, fell in the first three months of the year by 37 percent to $82 million, and the company anticipates that it might finish the second quarter with an operating loss of $340 million.
Shares of Seattle-based Amazon Friday recorded the steepest decline in 12 months, falling by 7.2 percent to $254.81. This stock price corresponds to a market capitalization for the giant retailer of $115.8 billion.
Net profit for the retailer fell from $130 million in the first three months of last year to $82 million, or 18 cents a share, in the first quarter of 2013. Sales of the company rose 22% in the same period, from $13.2 billion to $16.2 billion.
Amazon.com estimates for the second quarter of this year an operating result of between a loss of $340 million and a profit of $10 million. In average, analyst estimates indicate an operating profit of $165.1 million.
The company expects a revenue between $14.5 billion and $16.2 billion for the period April-June, compared with a projection of $15.9 billion from Wall Street analysts.
Third parties sold 40 percent worth of products. Sales of digital products (Kindle tablets, software, ebooks, audio books, etc.) went up at a “much faster” pace than physical products, according to chief financial officer Thomas Szkutak.
Amazon.com invests in new warehouses and development of digital content to attract both new customers and retailers in a partnership that can bring in new revenue. New warehouses built closer to the delivery destinations means a decrease of shipping costs as a percentage of net sales.
The slowdown in the company’s business is driven by the expansion of traditional stores in the online space, considers an analyst at JPMorgan Chase.
“Traditional retailers are losing less relative share as they increase selection online, price match more aggressively, and work to combat showrooming,” reads a report from JPMorgan Chase & Co analyst Doug Anmuth.
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