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Amazon.com, Inc. (AMZN), Costco Wholesale Corporation (COST): This Retailer Is Heading the Right Way

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Amazon.com, Inc. (NASDAQ:AMZN), the online retail giant, released its earnings for the second quarter on July 25, 2013. As a result some heavy investments, the company missed its earnings’ estimates by $0.07.
Amazon.com, Inc. (NASDAQ:AMZN)

With Amazon.com, Inc. (NASDAQ:AMZN) failing to report any profit, the big question is: What’s in store for the company in the future?

Quarterly earnings

Amazon.com, Inc. (NASDAQ:AMZN) posted a second-quarter loss of $7 million, or $0.02 per share, versus a profit of $7 million, or $0.01 per share, last year. Company’s revenue stood at $15.7 billion, up 22% from the last year. Analysts at Thomson Reuters expected the company to make a profit of $0.05 per share on $15.73 billion revenue.

Sales in North America rose 30%, while international revenue increased by 13%. In the international market, more than 13% of revenue came from Japan. Amazon.com, Inc. (NASDAQ:AMZN) Web Services’ revenue rose 61% to $892 million, reflecting the huge success in the cloud business.

In North America, Amazon.com, Inc. (NASDAQ:AMZN)’s operating profit grew 19% to $409 million. Amazon.com, Inc. (NASDAQ:AMZN)’s international segment wasn’t able to earn any profit, however. On the whole, the company’s gross margin grew 2.5%, whereas operating expenses were up 23% from the same quarter last year.

Profit guidance

In the next quarter, Amazon expects to generate revenue of $15.45 billion to $17.15 billion. Its earnings’ forecast ranges from a loss of $100 million to a profit of $275 million. Analysts expect Amazon to earn $0.09 per share on revenue of $16.98 billion. For the full year, analysts’ estimates stand at $1.27 a share on $74.75 billion revenue.

Going forward

In order to expand its video content, Amazon has gone into an extended deal with Viacom, Inc. (NASDAQ:VIAB). Through its partnership with Viacom, Inc. (NASDAQ:VIAB), Amazon has been broadcasting shows like “SpongeBob SquarePants” on the Internet. In order to increase its viewership, the company plans to uploading some new comedy series during the next few months as well.

In the international market, Amazon still needs more time before it starts to capture significant market share in digital media such as e-books and MP3s. As a result, the company will continue to invest in the development and marketing of its gadgets, requiring even more capital. As part of this plan, Amazon is making huge investments in its fulfillment centers in Spain and China. In the third quarter, the company will spending a lot on its digital video content in the U.S. and Europe. This spending is the primary reason behind a conservative third-quarter forecast.

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