Amazon, the Internet’s largest online retailer, has recorded its first quarterly loss in four years, posting a loss of $274 million (£170 million) on Thursday.
Amazon has also posted an operating loss of $28 million (£17.4 million), though the company's revenue has grown 27 per cent from last year, as it generated $13.18 billion (£8.18 billion) of income in Q3 2012.
The deficit has been partly attributed to losses incurred from being forced to write-down its $169 million (£105 million) investment in deals portal LivingSocial. In a company statement, Amazon explained that losses related to its minority stake in LivingSocial were "primarily attributable to impairment charge of certain assets, including goodwill."
Tim O'Shaughnessy, CEO of LivingSocial, rebutted Amazon’s damning conclusion. In a memo obtained by the Washington Business Journal, O'Shaughnessy pointed out that his company's Q3 performance contained a number of positive indicators.
“For the third quarter of 2012, our global revenue nearly doubled on a year-over-year basis. More important, for the first time since 2009, we had positive operating cash flow for our company on a global basis in the month of September. In other words, we ended the last month of the quarter with more money in the bank than we had at the beginning of the month, marking an important milestone on our path to profitability and long-term success," said O’Shaughnessy.
For his part, Amazon’s chief financial officer, Tom Szkutak, pointed to his company’s extensive investment in tablet and eBook reader development - Amazon is noted for selling its device at cost - adding that its quarterly performance was further impacted by expansion into China and video content production.
"We're investing very heavily in capacity, and you're seeing that impacting results," said Szutak.
The report noted that the Kindle Fire HD is its number one selling item on its site, with the Kindle Paperwhite being its best selling retail product for other vendors. Both products were due to make their long-awaited UK debut yesterday, though unfortunately the Kindle Paperwhite appears to have been hit by shipping delays.
The online giant's forecast for next year is expected net sales of between $20.25 billion (£12.57 billion) and $22.75 billion (£14.12 billion).