E-Commerce company Amazon.com’s third quarter net income plummeted 73%. The profit dip also pulled down company shares 19% in late trading.
Amazon had increased its spending on new products such as the Kindle Fire tablet, which was launched recently. The company reported Q3 net income of $63m, or 14 cents a share, from $231m, or 51 cents, a year earlier. Amazon missed the 24 cents predicted by analysts, according to Bloomberg.
The company is focusing on volume and market share at the cost of profit margins. It has said that it will sell its latest product Kindle Fire tablet for as low as $199, compared to Apple’s iPad price of $499. The company has also announced new plans for its publishing business.
Sales grew 44% to $10.88bn in the Q3, compared with $7.56bn in Q3 2010l. However, the Seattle-based company has said it may post an operating loss this quarter as well.
The company said Q4 operating results may range from a loss of $200m to a profit of $250m. Amazon predicts that the sales will continue to climb and reach somewhere between $16.5bn to $18.7bn in Q4.
"They missed investors’ expectations," said Colin Sebastian, a San Francisco-based financial analyst, told Bloomberg. He said. "If they don’t show a corresponding increase in earnings, investors start to scratch their heads."
