Heavy research and development expenditures cut into Amazon's net income in the second quarter. The online retail giant lost $30 million in net revenue year over year, earning $22 million for the
quarter. Net income and revenue figures fell short of analysts' estimates, and a tough outlook for the near future sent shares down 15 percent before the start of today's trading, reports
Business
Week. The fall was bad, but not as bad as the 22 percent hit Yahoo's stock suffered as a result of missing analysts' estimates. Amazon lowered expectations for the third quarter, citing the heavy
impact of R&D spending on the company's margins. Where is that money going? Amazon is expanding its sales offerings in a number of sectors--particularly toys, after terminating its contract with Toys
R Us. Losing that contract cost the company $20 million in the second quarter. It's also looking to expand into new areas, which CFO Tom Szkutak says "is going to be expensive short-term." He said
third-quarter revenue would be between $7 and $42 million, which would represent a year-over-year decline of between 87 percent and 24 percent. With such a huge margin for error, it's unlikely Amazon
will miss its third-quarter estimates. Analysts expressed their frustration during the earnings conference call, asking how CEO Jeff Bezos could be certain the investments in groceries and toys would
be worth it. He said it would continue to pay dividends 10 years from now. How will short-term investors respond?
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