Wall St. Unhappy With Amazon’s Q2 Profits; Shares Dip

E-commerce giant’s profits up 45 percent, but higher costs cut into margins

Talk about hard to please.

Amazon posted profits of $207 million, or 45 cents per share, during its second quarter, the e-commerce giant announced on Thursday.

That’s a 45 percent jump form the $142 million, or 32 cents per share, the company logged during the same period last year.

That wasn’t good enough for Wall Street, however. Analysts had been projecting that the company would earn 54 cents per share. The company’s stock tumbled 13 percent in after-hours trading to $104.07 in extended trading. It had closed at $120.07.

Amazon said rising costs had cut into its margins. Revenue grew 41 percent to $6.6 billion, beating expectations. However, expenses grew 40 percent to $6.3 billion, accelerated by the company's addition of 13 fulfillment centers designed to get customers their orders more rapidly.

Yet part of Wall Street’s jitters about the online retailer’s long-term growth is attributable to increased competition in the e-reader marker. Amazon’s popular Kindle has seen its dominance challenged by Barnes & Noble’s Nook and Apple’s iPad.

Amazon and Barnes & Noble have engaged in a price war over their e-readers over the summer. Amazon cut the price of the Kindle to $189 from $259, while Barnes & Noble introduced a bargain version of the Nook at $149.