Many consumers are reining in the purse strings this year and are being more careful with their spare cash. Retailers are seeing sales plummet and have to offer bigger discounts to tempt consumers to part with cash. Now we can tell you that Amazon sees its profits fall off a cliff as the company spends heavily on the upcoming Kindle tablet.
The online retailer saw it shares drop after it revealed a 73 percent fall in profits during the three months to September. The Telegraph is reporting that Amazon also feels there is a weak outlook for the upcoming holiday season.
Revenue for the retailer still grew though jumping by 44 percent to $10.88 billion, which was below market expectations and the 51 percent achieved in the second quarter. Amazon founder and chief executive, Jeff Bezos, said the company had seen strong sales of the Kindle eReader as well as the Kindle Fire tablet announced last month.
He claimed that September 28th was the biggest ever order day for the Kindle, with orders for the latest version being double of the last model launch. Bezos revealed the company is seeing strong Kindle Fire preorders, and are “increasing capacity and building millions more than we’d already planned.”
Amazon is also investing heavily in video content as well as other publishing deals to support the Kindle Fire. The sudden increase in spending though has shocked some investors, and there are many who feel Amazon will make a loss on each Kindle Fire sold. The retailer will be looking to claw that back though with sales of media and other lines once users have hold of the device.
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