# "Amazon investors stunned by size of projected loss" - Yahoo News



## EllisaBarr

http://finance.yahoo.com/news/amazon-investors-stunned-by-size-of-projected-loss-142130803.html

Last night Amazon released its earnings report and they are projecting a huge loss for the current quarter.

"...not even Bezos can get the benefit of the doubt when projecting a nearly billion [dollar] loss without explaining where the money is going."

I'm sure they're going to lose money on that new phone they came out with, and they're having trouble competing with cloud storage, but I wonder how much of that loss is KU?


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## cinisajoy

No no no.
This states they lost money last quarter which would be from April 1 to June 30.  So not one penny from KU.  Now here is the other thing.  KU was not even predicted at the time of the accounting.
It is strictly the phone.  If what I have been seeing is true, I predict many new users will be returning the phones.  I think this because people will think that 1 gig of data is huge and run through it in no time at all, and if they don't keep a close eye on their bills, they will have a rude awakening when they get that huge overage bill from ATT.

Now on to KU.  How long have Oyster and Scribd been around?  Have they been out long enough to see how many paid users vs how many just payers?  How many people will actually get $10 worth of books a month?    How many people will borrow 5 or more books a month and read them?    Note this is $10 of Amazon's outpay not what the book costs to the reader.  
I would bet good money that the marketing people did plenty of research before launching KU.
Just a couple of little thoughts.
The phone has no back up data and it is exclusive in two ways.  Which put off many buyers.  The major thing was the coverage.  Around BIG cities ATT is great.  Anywhere else not so great.


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## Becca Mills

The $126 million loss was for the second quarter. The projected loss for *this* quarter is $410 to $810 million. Something's causing a huge spike in the red.

ETA: People were already ticked about the second-quarter loss, which was announced Thursday.


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## Jennifer Lewis

I don't know how they are losing money when I buy nearly everything from them


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## cinisajoy

I know how.  It is all these authors having free books and amazon having to pay the delivery fees.
I would still say it will be more tied to the phone than KU, because investors put up extra money for KU.


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## Navigator

I suspect it's the phone as well. The reviews I've been reading (and watching on youtube) for it have been less than stellar.


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## Becca Mills

Jennifer Lewis said:


> I don't know how they are losing money when I buy nearly everything from them


Yeah, the NYTimes piece on the second-quarter loss quotes an analyst saying, "It's hard to have $20 billion in revenue and not make any money. It's a real feat."

Might be a good moment to buy some Amazon stock.


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## Elizabeth Ann West

It might be new device development for Christmas...

Same release last year expected $65 million to $440 million projected loss for 3rd Quarter 2013. http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1841320&highlight=

That quarter, the Kindle HDXs were released and the Kindle Fires were updated. They ended up reporting a quarterly loss of $126 million for 3Q 2013. http://www.geekwire.com/2014/amazon-sales-rise-23-loss-worse-expected/

Then at Christmas it was up $239 million http://finance.yahoo.com/news/amazon-4q-earnings-grow-miss-212940637.html

My guess is something big is coming, maybe it's KU, maybe it's something different. Who knows. but one quarter's loss statement for a company that yearly has losses in Q2 and Q3 to make it up in Q4 doesn't scare me.


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## Cherise

My unscientific impression is that Kindle Unlimited is bringing beaucoup traffic to Amazon. I unscientifically predict that this will be what secures Amazon's spot as king of the hill for the next five years.


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## cinisajoy

Well duh folks.  
Spending money now, to make major profits in the "everybody needs" season.

It was the same thing though on a much much much much smaller scale, when I was making crafts.    Buy the supplies, make the product, then sell the product.  It could be a week, a month or 6 months before I made money.    Oh wait that six month one was a loss.  I made the money back on the supplies and then some.  But as per an hourly wage, I think the end total was 1 cent per hour.


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## wtvr

This would be much more worrisome if Zon hadn't been doing this for the last 15 years. The numbers change, but revenues go way up while income remains flat. (and yes, a half million dollar variation above or below 0 is flat when revenues are this big.) After all this time, you have to figure they're doing it on purpose.

Here's an article from 2 years ago. Sorry to repeat - I posted this somewhere else yesterday too. http://www.fool.com/investing/general/2012/03/28/analysts-debate-is-amazoncom-a-top-stock.aspx


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## EllisaBarr

I wasn't overly worried or even surprised by their second quarter losses.  Their projected 3rd quarter losses are huge though.  That's a LOT of money, and they won't even say what it's for.  

I just think it's fun to speculate.  What if they originally planned to pay decent money per borrow, and their borrow rates shot through the roof?    See, it could be good news for those of you in Select!  

But I agree, from a more practical point of view, it's probably just R&D for the upcoming holiday.


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## Vaalingrade

At a certain point, you _have_ to start paying your investors. These aren't author's we're talking about; these people will actually fight back.


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## wtvr

Vaalingrade said:


> At a certain point, you _have_ to start paying your investors. These aren't author's we're talking about; these people will actually fight back.


It would take you like 3 seconds to google whether or not Zon stock had trended upwards in the last, oh 5 years, and say, tripled in value. Investor confidence is apparently pretty solid.


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## ricola

What usually happens in cases where investors don't get paid is that eventually, investors throw out the CEO.  They believe in Bezo's magic, but they've been speculating on the basis of hope for future returns.  When they get tired, he will be gone.


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## Amanda M. Lee

I think it's mostly the phone, without a doubt. What did they sink into R&D for that? It's not doing well because it doesn't offer anything special and it's just not a good phone. I certainly wouldn't trade in my iPhone for it. Sales have stagnated and R&D probably ran into the billlions -- spread out over several quarters. Thinking it's KU is funny. Although, to be fair, KU should run at a loss for Amazon for the first month or so because of the free trial offer. We won't know what Amazon's income vs. spending is on it until the actual subscriptions pay out: probably first quarter next year. Also, after looking into it a little bit more, I guess the Fire TV thing was a huge R&D output, too.


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## Diane Patterson

Bezos is Amazon's largest shareholder. He isn't going anywhere.

Investors have been willing to subsidize Amazon's narrow profits in order to achieve market dominance. They expect Bezos will continue this strategy of being the last man standing. Coming out with disasters like the Amazon phone (the reviews have been so terrible, I wonder why no one put a stop to it a lot earlier) is not what they want. 

However. Like Zuck with FB and Larry Page and Sergey Brin with Google, investors have been willing to trade stock gains for stock power. None of the shares issued in the companies can touch the voting power of the guys in charge, so it'll be business as usual for the foreseeable future.


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## wtvr

I can't wait to see adoption figures on KU too. Hopefully they'll leave the free month in place through the holiday season.


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## Vaalingrade

LisaGloria said:


> It would take you like 3 seconds to google whether or not Zon stock had trended upwards in the last, oh 5 years, and say, tripled in value. Investor confidence is apparently pretty solid.


Stock prices are maintained largely by pixie dust and wishes. It's the confidence the investors have that the company can turn a profit for them. Like an actual 'making more money than we pay' profit, not the pixie dust stock price hikes. When a company starts proudly announcing they're about to hemorrhage a billion dollars and won't tell anyone _why_, it's hard to maintain the magic belief.

I highly suspect that the investors are going to rally and get the SEC to punch some transparency into Amazon.


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## AngryGames

EllisaBarr said:


> http://finance.yahoo.com/news/amazon-investors-stunned-by-size-of-projected-loss-142130803.html
> 
> Last night Amazon released its earnings report and they are projecting a huge loss for the current quarter.
> 
> "...not even Bezos can get the benefit of the doubt when projecting a nearly billion [dollar] loss without explaining where the money is going."
> 
> I'm sure they're going to lose money on that new phone they came out with, and they're having trouble competing with cloud storage, but I wonder how much of that loss is KU?


Apparently all of these people acting surprised were just born in the last five years or so. How quickly everyone seems to forget the staggering loss statements from the early days of Amazon...


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## heidi_g

A $126 million reported loss on 19.3 billion of gross revenues, is what we would call in my auditing days immaterial  The projected losses are larger. However, I suspect Amazon is doing a lot of creative accounting. There are many ways to use expenses to keep net revenue down, and it's often in a company's financial interest to do so. So I guess for me, this report is not real earth shattering.

_"The Company believes that it will incur substantial operating losses for the foreseeable future, and that the rate at which such losses will be incurred will increase significant from current levels," Bezos wrote in the SEC filing.

It may be the most honest statement ever written in a government filing. True to his word Bezos and Amazon have racked up losses and shareholders have largely forgiven them for doing so._

From the above statement, it does seem like Bezos has intended to run the company at a net operating loss and has been doing so. Don't know if they pay dividends. If they do, most shareholders won't care about the net revenues, losses.


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## Usedtopostheretoo!

Vaalingrade said:


> Stock prices are maintained largely by pixie dust and wishes. It's the confidence the investors have that the company can turn a profit for them. Like an actual 'making more money than we pay' profit, not the pixie dust stock price hikes. When a company starts proudly announcing they're about to hemorrhage a billion dollars and won't tell anyone _why_, it's hard to maintain the magic belief.
> 
> I highly suspect that the investors are going to rally and get the SEC to punch some transparency into Amazon.


Very true. I worked for Pfizer (12 years), joining their vast crew in 2001. That was right about the time they had trouble convincing investors that they could produce another blockbuster drug, on the heels of several blockbusters. Investors became accustomed to incredible growth, and when Pfizer couldn't deliver...they balked. Stock prices spiraled downward and have sort of recovered now that it's clear that big pharma blockbuster days are far and few between. If Amazon keeps announcing losses, investors will eventually balk.


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## wtvr

heidi_g said:


> A $126 million reported loss on 19.3 billion of gross revenues, is what we would call in my auditing days immaterial The projected losses are larger. However, I suspect Amazon is doing a lot of creative accounting. There are many ways to use expenses to keep net revenue down, and it's often in a company's financial interest to do so. So I guess for me, this report is not real earth shattering.
> 
> _"The Company believes that it will incur substantial operating losses for the foreseeable future, and that the rate at which such losses will be incurred will increase significant from current levels," Bezos wrote in the SEC filing.
> 
> It may be the most honest statement ever written in a government filing. True to his word Bezos and Amazon have racked up losses and shareholders have largely forgiven them for doing so._
> 
> From the above statement, it does seem like Bezos has intended to run the company at a net operating loss and has been doing so. Don't know if they pay dividends. If they do, most shareholders won't care about the net revenues, losses.


Ah, sanity. Yes. ^^



Vaalingrade said:


> I highly suspect that the investors are going to rally and get the SEC to punch some transparency into Amazon.


That's a pretty amusing prediction. There's nothing like triple digit stock growth to inspire a mutiny, after all.


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## Lucian

Steven Konkoly said:


> Very true. I worked for Pfizer (12 years), joining their vast crew in 2001. That was right about the time they had trouble convincing investors that they could produce another blockbuster drug, on the heels of several blockbusters. Investors became accustomed to incredible growth, and when Pfizer couldn't deliver...they balked. Stock prices spiraled downward and have sort of recovered now that it's clear that big pharma blockbuster days are far and few between. If Amazon keeps announcing losses, investors will eventually balk.


Someone needs to sit these folks down and explain to them the value of exposure.

Not me, though! *runs away*


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## FictionalWriter

David S. said:


> Taking over the world costs money.


ROTFLMAO!!!


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## Jennifer Lewis

Maybe the whole thing is a giant tax dodge….


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## ThrillerWriter

Vaalingrade said:


> Stock prices are maintained largely by pixie dust and wishes. It's the confidence the investors have that the company can turn a profit for them. Like an actual 'making more money than we pay' profit, not the pixie dust stock price hikes. When a company starts proudly announcing they're about to hemorrhage a billion dollars and won't tell anyone _why_, it's hard to maintain the magic belief.
> 
> I highly suspect that the investors are going to rally and get the SEC to punch some transparency into Amazon.


Transparency? You do realize Zon is the one disclosing the losses. The ragehate against them is too strong with you.


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## Vaalingrade

And the strawman fallacy is strong with you.

It is still fact that they aren't saying _why_ they're fine and dandy to expect to lose a billion dollars and investors are skittish in the best of circumstances. Unless they get explanaitons beyond 'trust us', they're not going to be happy and are going to start exercising the legal rights that shareholders in public companies have.


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## Richardcrasta

David S. said:


> Taking over the world costs money.


Trust this isn't a line from an Austin Powers movie.


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## ThrillerWriter

Vaalingrade said:


> And the strawman fallacy is strong with you.
> 
> It is still fact that they aren't saying _why_ they're fine and dandy to expect to lose a billion dollars and investors are skittish in the best of circumstances. Unless they get explanaitons beyond 'trust us', they're not going to be happy and are going to start exercising the legal rights that shareholders in public companies have.


What amount would you like to bet that the SEC never enters the arena? Feel free to PM.


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## m.a. petterson

I'm an investor in AMZN precisely because of Jeff Bezos and his long-term vision.


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## ThrillerWriter

It shows a complete lack of business knowledge to suggest thatthe SEC are going to investigate because of a loss. All one needs to do is comb through the report to see where the operating losses stem from; to think that the lawyers/auditors haven't thought this through more than some skeptic on a message board just strains my ability to take anything that person says seriously. Unless he is saying this is some type of Enron size cover-up, it's quite simply, a stupid comment. 

What happened is exactly what you would expect: Amazon's stock tanked. Google SEC and Amazon, see if you can find any links even hinting at an investigation. You won't find anything. In fact, you may be the only person in the United States even considering such an outlandish course of events.


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## HappyGuy

One word ... drones.


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## Cherise

HappyGuy said:


> One word ... drones.


This is funny!

Just in case anyone is taking it seriously, though, I am pretty sure the drones were a comedic publicity stunt.


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## balaspa

I heard about this over the weekend. It's amazing. I don't know how long they can expect this to go on.


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