Amazon Stock Loses Huge After Poor Earnings
posted Saturday Jul 26, 2014 by Scott Ertz
It might just be time for Amazon to begin focusing its offerings. Since the company was originally founded as an online bookstore, the company's product and service offerings has grown tremendously. Whether you're looking to purchase books, shoes or flour, you can probably find it on Amazon.com.
Today the company also offers tablets and phones and streaming video and cloud computing - all very divergent from what made the company successful originally. The success of this divergence tactic is beginning to show up in their stock, and not in a way anybody would want.
After announcing a $126 million loss in the second quarter of 2014, the company's stock price dropped dramatically. How dramatically? Almost 11% in after hours trading. This is mostly due to a huge swing in operating profitability. Last year the company had a $79 million gain in for this quarter; this year they ran a $15 million loss. All of this on higher sales.
Now the company does not exactly breakdown where its profits and losses come from. In fact, Amazon has been very good at hiding their cloud numbers. This would certainly indicate that the company is having trouble making their AWS cloud services profitable.
How could this be? Microsoft Azure cloud services match Amazon prices almost penny for penny, yet Microsoft is seeing profit in the Azure division. Perhaps it has to do with what the companies are good at. While Microsoft is good at building enterprise development tools, Amazon is good at selling products to consumers. This could very well be a case of just because you can doesn't mean that you should.
