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by Staff Writers San Francisco (AFP) July 24, 2014
Internet retail titan Amazon on Thursday reported a money-losing quarter despite impressive growth in sales, sending shares diving. The Seattle-based firm said that it had a net loss of $126 million in the quarter that ended June 30, widening the deficit from $7 million in the same period a year earlier. Sales, meanwhile, climbed to $19.34 billion in a 23 percent rise from the second quarter of last year. The loss came as Amazon poured money into a new Fire smartphone, original programming for its Prime subscription service, drone package delivery and more. "We continue working hard on making the Amazon customer experience better and better," Amazon founder and chief executive Jeff Bezos said in the earnings release. He rattled off a list of recent Amazon product or service introductions that included improved delivery operations in the US and Europe; a streaming music service, and Kindle Unlimited all-you-can-read book subscriptions. "I feel like this is 'Groundhog Day' over and over again," Forrester analyst Sucharita Mulpuru said, comparing Amazon earnings to a Bill Murray comedy film about a man perpetually reliving the same day. "I don't know how much longer it can keep going." Mulpuru was skeptical of the argument that Amazon is investing heavily for the future, noting that Google and Apple pour money into innovation but manage to make profit along the way. "Apple created the iPad; Google has Fiber, Glass and driverless cars and they are still pulling profit," Mulpuru said. "So what is Amazon's excuse?" The analyst suspected that Amazon was actually investing in shipping systems, dynamic pricing algorithms, and cutting prices to grab market share in moves "effectively decimating a lot of retailers." Investors betting on Amazon gaining a near monopoly and then jacking prices will likely be disappointed, the analyst reasoned. Regulators would likely weigh in under those circumstances, and major retail players such as Wal-mart won't go quietly into that good night, Mulpuru said. Amazon shares plunged more than eight percent to $329.50 in after-market trades that followed release of the earnings figures. Amazon forecast that its sales would continue to grow impressively this quarter, climbing from 15 percent to 26 percent to as high as $21.5 billion when compared with the prior year. The online retailer expected its operating loss to widen, possible to as much as $810 million in contrast to a $25 million operating loss logged in the third quarter of last year.
Nokia reports renaissance, shares jump The group, which recently sold its phone division to Microsoft, reported a net profit for the quarter of 2.51 billion euros ($3.38 billion), from a loss of 226 million euros at the same time last year. The results surprised the market with an unexpectedly rapid recovery based on network technology. But sales fell by nearly 7.0 percent to 2.942 billion euros, although this was in line with the overall expectations of analysts polled by Dow Jones Newswires. The strong turnaround boosted Nokia shares which were showing a gain of 7.78 percent to 6.16 euros in mid-afternoon trading. The overall Finish stock market was ahead by 0.64 percent. The group is focusing on its information networks expertise and on its data technologies as announced last April, when former Nokia Solutions and Networks head Rajeev Suri was appointed chief executive. Suri, who is known in the IT business as a turnaround specialist, oversaw an increase in the value of the telecom networks business to the tune of about eight billion euros ($11 billion) according to a biography published on the group's website. The move to strengthen the networks division coincides with a moment when mobile data traffic is surging as the world's largest operators are investing in high-speed mobile phone equipment. Suri said in a statement on Thursday that the technology networks division "has allowed us to deliver strong profitability while improving our topline trend." He said: "Maintaining this balance will remain a clear priority in the second half of the year when we expect networks to return to year-on-year growth. "Our expectations for the full year 2014 have improved and we now expect full year underlying profitability for networks to be at our slightly above our long-term target range of 5 to 10 percent." - A business chameleon - Nokia fell rapidly from a leading place in the mobile telephone equipment industry to a straggler after being overtaken by the rise of smartphones. For Nokia, shifting from mobile phones to networks is just the latest change in the company's 150-year history, which has seen it redefine itself over the years from a small forestry group to a maker of rubber boots, tyres, cables, electronics, TVs and then mobile phones. Each time, the company has known when to cut loose loss-making entities and find new avenues to develop. Nokia's strategy mirrors that of Swedish competitor Ericsson, which also sold its handset business and is currently focusing on the networks sector. Suri said that the latest quarterly performance "along with many conversations I have had with customers, partners, employees and others in my first quarter as CEO, gives me a high degree of confidence about our future." He also said that free navigation applications for the auto sector, called HERE, were doing well and that the group would continue to invest in this. The technologies activities of the group raised gross profit by more than 30 percent during the quarter, thanks largely to Microsoft which has become the main owner of the intellectual rights after buying the handsets and services activities. But on July 17, Microsoft said it would shed 18,000 jobs around the world with the loss of about 1,100 jobs in Finland. Nokia's restructuring plan, announced in 2011, has generated heavy charges likely to amount to 2.0 billion euros by the end of this year. The number of Nokia emoployees at the end of the quarter was nearly 56,500, about 1.0 percent fewer than at the same time last year.
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