Amazon Posts Lower Profit, Higher Sales
Amazon.com posted a 32 percent drop in quarterly profit yesterday due in part to higher tax expenses, but the online retailer beat Wall Street targets as a new discount shipping program, although costly, drove sales higher.
The online retailing pioneer rolled out a program in February that allows customers to get two-day shipping for free. The promotion, called Amazon Prime, is hurting profit even as it boosts sales, but Amazon.com Chief Executive Jeff Bezos said in a statement that the strategy is the right one.
Sales rose to $ 1.75 billion from $ 1.39 billion, slightly topping the average Wall Street estimate of $ 1.7 billion.
Amazon said sales grew more than 26 percent from the second quarter of last year and also raised its revenue targets for the third quarter and all of 2005 as well.
The company, which recently celebrated its 10th anniversary, expects sales to come in between $ 1.76 billion and $1.91 billion.
The $ 1.835 billion midpoint of this range is higher than the $ 1.81 billion that analysts were expecting.
Results for the third quarter, which ends in August, will include sales Amazon.com generated from the latest Harry Potter book, which the company said was the biggest product release in the company’s history. Amazon said it received more than 1.5 million pre-orders worldwide for "Harry Potter and the Half-Blood Prince."
