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11/21/2024 03:26:35 pm

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Amazon Risks Losing Investors Amid Company Loss

Amazon CEO Jeff Bezos

(Photo : REUTERS/Jason Redmond) Amazon CEO Jeff Bezos talks about his company's new Fire smartphone at a news conference in Seattle, Washington June 18, 2014.

Amazon is dealing with a difficult phase in its business following the release of its quarterly reports, which showed unsatisfactory results.

The e-commerce company recorded revenue amounting to US$19.3 billion for the second quarter, is 23 percent bigger than the company's revenue from the same quarter in 2013.

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However, records show that despite the increase in revenue, Amazon suffered a second-quarter loss of US$126 million, greater than analysts' estimate of US$66.7 million average loss.

Investors fear that the company will suffer more losses if it continues buying products to sell to people, which has not been generating enough revenue for the company.

Amazon shareholder Michael Scanlon expressed his disappointment with the report saying he gets frustrated when Amazon spends hundreds of millions of dollars but does not let the revenue flow through.

"I'm definitely ready for profits," Scanlon said.

When the stock market closed during after-hours trading on Thursday, investors dropped Amazon's shares by more than 5 percent.

Amazons bottom-line figures turned to red and even Wall Street had difficulty accepting the company's almost nonexistent profit.

Amazon CEO and founder Jeff Bezos is unfazed by the dwindling result of the company's net income. He wrote a letter to his shareholders in 2013 telling them that he had a vision for the company.

Bezos said that his spending on behalf of the company is a strategy. He added that investing "just-in-time fashion would be too clever by half."

Investors expressed their concern that Bezos will not be able to limit his ambitions and continue investing on non-profit bearing companies instead on focusing in "sustainable profit business."

Other shareholders of the company demand that there should be a stipulation for full disclosure regarding where the company is heading.

Destination Wealth Management CEO Michael Yoshikami said that given the gross revenue of Amazon that reached more than US$751 million in 2013, it should not be posting large amount of losses.

"You've got to give more information to justify faith in the name," Yoshikami said.

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