Thursday, October 27, 2011

Why Did Amazon Profits Take A Hit? It Is Investing In The Future (Content And Web Services) | TechCrunch

AMZN net income slideIf one is going to slam Netflix for investing in its future, one might as well add Amazon to this list. Amazon’s third quarter 2011 profits are down 73 percent and on Oct. 25, 2011 is being slammed in after-hours trading (down $28 a share).

As also was the case at Netflix, revenues were up, in Amazon's case, up 44 percent to $10.9 billion.

Orders for the new Kindle Fire apparently are substantially above what Amazon had projected, so Amazon is building millions more units than it originally expected.

Amazon also is ramping up investments in the backend infrastructure to support all the digital media it expects people will want to consume on their Kindles, especially their Kindle Fires. Amazon spent $769 million on “technology and content” in the quarter, up 74 percent from a year ago.

Sometimes companies have to take risks. Sometimes they have to invest. Investors don't like the quarterly fluctuations.

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