http://www.nytimes.com/2014/10/24/technology/amazon-loss-quarterly-earnings.html 2014-10-23 23:31:59 Amazon’s Stock Falls as Loss Exceeds Forecasts The online retailer was also cautious in its outlook for the fourth quarter, saying it would make less than last year. === Amazon Amazon, the retailer and entertainment company, Analysts had expected a loss of 74 cents a share, according to Yahoo Finance. Revenue, as always at the e-commerce giant, grew strongly, but a little less than expected. Sales during the quarter were $20.58 billion. Analysts had expected $20.84 billion. Amazon shares fell 10 percent after hours on the news, which was reported after the close of regular trading. Over the last year, as worries about Amazon have picked up, the previously highflying stock has fallen about 15 percent. The company was cautious in its outlook for the fourth quarter, saying that even in the best case, it would make less than it did last year. It also said its revenue in the quarter might grow as little as 7 percent — an amount that would be thrilling to any other big retailer but that is much less than Amazon’s traditionally robust growth. Before the earnings were released, analysts were generally enthusiastic. Cowen & Company said it expected Amazon to lose “only” 57 cents a share. Colin Gillis of BGC Partners, usually somewhat skeptical of Amazon, issued an upbeat note that focused on the potential of the company to use its hardware for an advertising network. “We are actually mildly positive on the potential of the current investment cycle as Amazon builds an ecosystem with its Kindle readers (success), tablets (mild success), App store (mild success), Fire TV (limited traction but a good product) and phone (failure, priced too high and limited distribution),” Mr. Gillis wrote. He noted that the retailer knew where its tens of millions of customers lived, what they liked and how they consumed. Michael Pachter of Wedbush Securities was a mild dissenter, citing “a variety of customer experience enhancements” that will soak up potential profits. These enhancements include a streaming music service recently introduced by Amazon. It is free for Amazon Prime shipping members. Spending on video and music content will total $2 billion this year and $2.5 billion next year, Mr. Pachter wrote. Free things make enrolling in Prime more attractive, and that inspires people to buy more, which is how Amazon is really expected to make money. But not soon. Analysts expected a profit of $1.91 a share in 2015, according to Yahoo Finance, but that estimate might need to be revised. The third quarter was marred by the disappointing reception of the Fire phone, Amazon’s long-awaited and much-promoted entry into the smartphone market. A marketing survey of 500 Amazon customers could not find any who reported owning a Fire. The majority of the reviews on Amazon’s own site give the Fire the lowest possible rating. A $200 price cut last month briefly pushed the phone up on Amazon’s list of top-selling electronics products, but it quickly fell off again. Thousands of employees spent years developing the phone. It is a rare case of Amazon completely misjudging the appeal of a new product.