Online retailer Amazon.com, Inc. (AMZN: Quote) said Thursday after the markets closed that its second quarter profit dropped 96% from last year, as higher costs and expenses and increased income tax provision more than offset a 29% increase in net sales.
The company's quarterly earnings per share also fell short of analysts' forecast as did its quarterly revenue.
At the same time, the company gave a down-beat sales outlook for the third quarter and forecast an operating loss for the quarter.
Amazon shares are currently losing 1.50% in after hours trading after closing the day's regular trading session at $220.01, up $2.96 or 1.36%. The shares trade in a 52-week range of $166.97 to $246.71.
Total operating expenses jumped 31% to $12.7 billion in the second quarter. As a result, operating income for the quarter slipped 47% to $107 million from $201 million last year.
North America segment sales, representing the company's U.S. and Canadian sites, rose 36% to $7.33 billion in the second quarter.
International segment sales, representing the company's U.K., German, Japanese, French, Chinese, Italian and Spanish sites, grew 22% to $5.51 billion.
For the second quarter, worldwide media sales increased 13% to $4.12 billion, while worldwide electronics and other general merchandise sales surged 38% to $8.16 billion.
Amazon said Kindle Fire remains the #1 bestselling product across the millions of items available on its Website since its launch in late September. Over the same period, the top 10 selling items on Amazon.com were digital products - Kindle, Kindle books, and accessories.
With many technology companies vying with each other to come out with low-priced smartphones, Amazon is priming to launch its first smartphone that will primarily compete with Apple, Inc.'s (AAPL) iPhone, a Bloomberg report said earlier this month.
Amazon is said to be working with Chinese handset maker Foxconn International Holdings Ltd. for the development of the device which is scheduled for a release in the fourth quarter of 2012, the report said.
The addition of the smartphone to its lineup of handheld devices such as the Kindle Fire tablet and Kindle e-readers, will help boost the sales of Amazon's extensive selection of digital content and services for such devices, including vast range of digital books, videos and music.
For the second quarter ended June 30, 2012, the Seattle, Washington-based company reported net income of $7 million or $0.01 per share, compared to $191 million or $0.41 per share for the year-ago quarter.
On average, 37 analysts polled by Thomson Reuters expected the company to earn $0.02 per share for the second quarter.
The latest quarter results includes $65 million of estimated net loss related to the acquisition and integration of robot maker Kiva Systems, Inc.
Net sales for the second quarter rose 29% to $12.83 billion from $9.91 billion in the same quarter last year. Thirty-eight analysts had a consensus revenue estimate of $12.89 billion for the second quarter.
Looking forward, the company forecast third quarter net sales of $12.9 billion to $14.3 billion, representing a year-over-year growth of 19% to 31%. Analysts currently expect the company to post revenue of $14.10 billion for the third quarter.
The company also said it expects a third quarter operating loss in the range of $350 million to $50 million. The guidance includes about $275 million for stock-based compensation and amortization of intangible assets.
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by RTT Staff Writer
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