Amazon’s Q2 loss sends stock falling; company expects huge operating loss next quarter

On Thursday, the same day that its first-ever smartphone, the Fire Phone, started shipping, Amazon (s AMZN) also announced earnings for the quarter ending June 14, 2014. The company missed analyst estimates, sending stock down nearly 7 percent in after-hours trading.
Revenues for the quarter were $19.34 billion, up 23 percent compared to this time last year. But the company saw a loss of $126 million, or $0.27 per share. Analysts had expected losses of $0.15 per share.
Operating losses, which analysts monitor closely because they worry about Amazon’s razor-thin profit margins, were $15 million for the quarter, compared to an operating income of $79 million this time last year. The company expects an even larger operating loss next quarter — between a whopping $810 million and $410 million.
It appeared that Amazon Web Services revenues were down as well, though Amazon doesn’t break them out separately. In an investor call following the earnings report, CFO Tom Szkutak wouldn’t answer whether the company plans to to break out AWS revenues separately.
This quarter, Amazon launched a number of new programs: In addition to the roll-out of the Fire Phone, the company debuted Prime Music, a streaming music service free to Prime members, and Kindle Unlimited, an ebook subscription program for $9.99 a month. And licensing content for programs like these and, more significantly, Prime Instant Video, is expensive. Amazon will spend over $100 million on original video content next quarter, Szkutak said.
The company’s also made news thanks to its ongoing contract battle with book publisher Hachette: It is delaying shipments and has taken away pre-orders on Hachette titles. But that topic did not come up during the call.
This post was updated several times on Thursday afternoon.