Amazon.com shares plunge
Online retail monolith Amazon.com, shares have plunged 14% following a bleaker outlook on revenue projections.
Amazon.com said it would earn between US$6bn and $7bn during the fourth quarter. The lower estimate is more than $1.2bn down on the $7.2bn it had earlier projected.
It is bad news for investors in Amazon.com as the fourth quarter accounts for more than 40% retailers annual profit.
The news came as third quarter profits jumped by 48%, to $118m, and overall revenues increasing 33% to $4.26bn.
Amazon.com said it expects annual sales were no longer to be the $20.1bn forecasted in July, but would now be in the range of $18.46bn to $19.46bn billion.
The slowdown included a fall-off in the number of online purchases worth more than $1,000.
The company also highlighted the performance of its Kindle digital book reader, saying it now accounted for 10% of sales of all books available in both digital and physical form.
Amazon.com’s international sales again edged up as a share of total revenues, now accounting for 46% of the total.
Jeff Bezos, CEO, said that Amazon.com would continue to invest during a prolonged recession, but would do so cautiously.
We think that is sensible in the context of this macro environment, Bezos said.
Tom Szkutak, Amazon.coms chief financial officer, said the forecast reflected ‘appropriately conservative assumptions’ and followed slower sales at the end of the quarter in September as consumers reacted to the turmoil on world financial markets.
Times are tough for the digital set, earlier this month eBay announced that it was cutting its global workforce by 10% and just this week Yahoo! announced it was cutting at least 1,500 jobs to cope with the weakening economy.