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Amazon May Lose Hundreds of Millions, but Things Are Looking Up

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Jeff Bezos, CEO and founder of Amazon, at the introduction of the new Amazon Kindle Fire HD and Kindle Paperwhite personal devices, in Santa Monica, Calif., Thursday, Sept. 6, 2012. (AP Photo/Reed Saxon)
Reed Saxon, AP
Amazon just announced another quarter of tiny profits, and says it expects to lose as much as $340 million this quarter. But things are still looking up for the world's biggest online retailer.

First, the good news: Sales for the first quarter rose 22% to $21.27 billion, only slightly below Wall Street's expectations. And its earnings per share for the quarter came in at 18 cents, double what was expected.

The bad news? Amazon still isn't a terribly profitable company. After eking out $97 million in profit last quarter, it reported $82 million in net income this time around. There's a reason CEO Jeff Bezos had to reassure investors this month that his company is not, in fact, a charitable organization.

And that isn't expected to turn around in the immediate future: Its guidance for the second quarter calls for operating income somewhere between a gain of $10 million and a loss of $340 million. Yes, there's a real possibility Amazon could lose a third of a billion dollars for the quarter.

Yet things are looking up for Amazon. Here are a few things working in its favor:
Its investors don't care about profits. As we recounted last time around, investors are on board with Amazon's consistent sales figures and heavy investments in future growth.

The new Internet sales tax will help Amazon. The Marketplace Fairness Act, which would give states the ability to tax out-of-state online sales, looks poised to clear the Senate this week. The tax would hurt Amazon's smaller competitors, and free up Amazon to build the fulfillment centers it needs to facilitate fast deliveries.

It's aking on Netflix. Amazon wasn't content to be just a bookseller, and it's not content to be just a retailer. Rumors that Amazon is planning a set-top box to stream its Instant Video service drove the share price upwards on Thursday.

Its "cloud" is growing. Amazon Web Services, the company's cloud computing platform, is expanding its reach in the Asia Pacific region.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.


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charpist5

It's aking on Netflix.

What does that mean? What is "aking"?

April 26 2013 at 8:20 AM Report abuse rate up rate down Reply
Hello Tink

The Senate can pass this but they can't pass gun legislation. They're also good at passing raises for themselves.

April 26 2013 at 8:07 AM Report abuse rate up rate down Reply
Lainie

we love amazon e buy dvd and books cd we love it

April 26 2013 at 1:12 AM Report abuse rate up rate down Reply
BLONDIE & GRUMPY

Could someone be kind enough to tell me what they mean by "AKING ON NETFLEX?"

April 26 2013 at 12:12 AM Report abuse rate up rate down Reply
mariusmoor

" Rumors that Amazon is planning a set-top box to stream its Instant Video service drove the share price upwards on Thursday."

Isn't that what their Roku is for?

April 25 2013 at 9:45 PM Report abuse rate up rate down Reply