Rising Costs
Operating income will be $360 million to $560 million, Amazon said yesterday in a statement. Sales will be $12 billion to $13.3 billion. Analysts surveyed by Bloomberg had forecast operating profit of $621.6 million and sales of $12.2 billion on average. Operating expenses rose 40 percent to $7.29 billion last quarter.
Amazon introduced a thinner version of the Kindle in July that works with Wi-Fi and is $50 cheaper than the $189 Kindle that runs over mobile-phone networks.
Amazon is expanding its warehouses and distribution centers to take advantage of the economic and retail recovery. It’s also spending more to promote Zappos.com, which it acquired last year. The company has built 10 new warehouses and will finish another three by the end of the year, Chief Financial Officer Tom Szkutak said on a conference call.
“That — combined with perhaps some other factors like promotional activity and lower Kindle prices — has perhaps temporarily hindered margins,” said Fred Moran, an analyst with Benchmark Co. in Boca Raton, Florida.
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