meets tiny 2Q profit expectations

Profit hurt by a $65 million loss related to its acquisition of Kiva Systems Inc.

Written by Agencies | Los Angeles | Published: July 27, 2012 10:54:37 am

Online retailer Inc. on Thursday reported muted second-quarter earnings and projected an operating loss for the current quarter as it absorbs the costs of a warehouse technology acquisition and plans to spend more on order-fulfillment centers ahead of the holidays.

Amazon said its profit was hurt by a $65 million loss related to its acquisition of Kiva Systems Inc.,a warehouse technology company that Amazon agreed to buy in March for $775 million in cash. The deal closed on May 1. Amazon is hoping that Kiva’s automated systems help boost productivity and improve profitability in the long run.

The Seattle-based company said it expects third-quarter revenue to grow between 19 percent and 31 percent from a year ago. That amounts to sales of $12.9 billion to $14.3 billion. The midpoint is short of the $14.1 billion expected by analysts,according to FactSet.

It also forecast a third-quarter operating loss of $50 million to $350 million.

Chief Financial Officer Tom Szkutak said the projected loss was due in part to investment in the company’s fulfillment centers ahead of the all-important holiday quarter. It plans to open 18 new fulfillment centers this year and has opened six so far,he said.

After initially falling,Amazon’s shares rose $2.63,or 1.2 percent,to $222.64 in extended trading following the release of the results.

Amazon reported net income in the three months to June 30 came to just $7 million,or a penny per share,a drop of 96 percent from $191 million,or 41 cents,a year ago.

That matched analysts’ meager expectations.

Revenue grew 29 percent to $12.83 billion,which was short of the $12.90 billion expected by analysts.

Amazon said that revenue was weighed by currency movements to the tune of $272 million,which the company had forewarned of in April.

Sales of digital goods like Kindle e-books,music and movies rose 13 percent to $4.12 billion,while sales of electronics and other items rose 38 percent to $8.16 billion.

The Kindle Fire,a $199 tablet tailored to handle purchases from,remained the company’s top-selling item.

For now,it appears investors are giving the company’s lackluster forecast a pass. Earnings for the fiscal year through December are estimated by analysts to be just $1.17 per share,meaning shares are trading at an eye-popping 190 times earnings.

Apple Inc. shares trade at around 13 times earnings while Google Inc. shares trade at around 14 times earnings.

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