Amazon.com, the world's largest online retailer, today forecast lower second-quarter operating profit than analysts predicted as it builds warehouses and promotes its Kindle electronic-book reader.
Operating income, which excludes taxes and interest, will be $95 million to $245 million this quarter, the Seattle-based company said today in a statement.
Analysts surveyed by Bloomberg expected, on average, operating income of $369.5 million.
Amazon chief executive Officer Jeff Bezos is using the company's growing cash hoard to build distribution centers, expand online video-streaming services and boost marketing for the Kindle. Spending growth has spurred investor concern that Amazon will erode its profits and valuation.
Sales in the first quarter rose 38 per cent to $9.86 billion, beating the $9.54 billion average prediction of analysts in a Bloomberg survey.
Net income was $201 million, or 44 cents a share, down nearly 33 per cent compared to the same quarter a year earlier.
Amazon more than doubled capital expenditures to $979 million last year and will spend about $900 million this year as part of its effort to expand warehouses and data centres.
Amazon may miss out on as much as $520 million in revenue this year if a change in US policy forces it to collect sales taxes, according to data compiled by Bloomberg.
Such a law may curb about $7 billion in domestic online purchases, the data show.
Amazon got its start in 1995 as an online bookseller. It has since expanded into thousands of products - from DVDs to baby clothes. Amazon Web Services, which lets customers rent computer capacity to house data and run computer applications, may one day be as big as the retail business, the company has said.
Amazon may have sold more than 8 million Kindles last year, accounting for about 5 per cent of sales. The device is its best-selling product.
Amazon doesn't disclose Kindle sales figures.
EBay, owner of the world's biggest online retail marketplace, reports its quarterly financial results tomorrow.
Bloomberg
