Amazon third quarter sales grow 24%

Amazon. com Inc posted a narrower quarterly loss and grew sales by a better-than-expected 24 per cent yesterday, sending its shares up 8 per cent.

The revenue performance indicated strong momentum of the world’s largest internet retailer going into the crucial US holiday season, which some experts say could be the slowest in years.

Rival Ebay Inc gave a disappointing holiday forecast last week, saying the US economic environment, including consumer confidence, had deteriorated in part because of the UsS government shutdown.

Amazon forecast sales of between $23.5 billion (€17 billion) to $26.5 billion, which analysts called conservative.

“It’ll be a somewhat difficult macro environment in the fourth quarter,” said Morningstar analyst R.J. Hottovy. “But it looks like the revenue momentum will continue into the fourth quarter.”

Much of that growth came from its home market, where net sales leapt 31 per cent to $10.3 billion as a faster delivery by a growing network of distribution or fulfillment centers drove customer demand, Amazon said. International sales also expanded 15 per cent, up from 13 per cent in the previous quarter.

Amazon is trying to turn itself from an online retailer into a broader technology company offering gadgets like tablets to consumers and cloud computing services to corporations and governments.

The evolution has entailed big investments in technology, and content such as videos and music, and all while building distribution centers across the United States and expanding in competitive overseas markets such as China. Its Kindle Fire tablets went on sale this month and will compete with Apple Inc's iPad and Microsoft Corp's Surface.

It is spending billions of dollars to expand and that has taken a toll on earnings. But investors believe the move will pay off as the spending tapers and margins expand.

Net loss was $41 million in the third quarter, or $0.09 per diluted share, narrowing from a net loss of $274 million, or $0.60 per diluted share, in the third quarter of 2012.

Executives said they will continue to invest in distribution abroad and on buying and creating content for the Instant Video service, which has helped drive the success of Prime, its $79-a-year, two-day shipping service that also offers free video streaming.

Amazon grew Prime members, who typically spend more on goods of all kinds, by several million in the past 90 days, executives said without elaborating. Expanding free-streaming video is also attracting Prime members.

Reuters