Jefferson Graham

USA TODAY





LOS ANGELES — Amazon had warned that it would lose bundles of cash in the third quarter, and it didn't disappoint.

But the size of the loss and a forecast that warned of more red ink by year's end chilled investors, who had already sent shares sharply lower for the year.

The Seattle-based online retailer (TICKER: AMZN) said it had a net loss of $437 million for the quarter, or 95 cents a share, compared with $41 million, or 9 cents a share, in the year-ago quarter. Analysts had forecast a loss of 74 cents a share.

Revenue rose 20% to $20.6 billion, short of the $20.84 billion projected by analysts. Amazon shares tumbled 11%, to $278.89, in after-hours trading. Ahead of the report, shares had lost 23% year to date, singed by prior big losses.



Huge losses will continue in the fourth quarter, Amazon said. The company projected losses as deep as $570 million for the fourth quarter, and revenue of $27.3 billion to $30.3 billion. That's shy of the average $30.9 billion analysts polled by Thomson Reuters had forecast.

MISFIRE

Amazon in the third quarter launched a highly publicized smartphone, the Fire, which attempted to take on the iPhone, but was a massive flop. The Fire was originally priced at $199 with a two-year contract, but it has been marked down to $1.

The company has a new line of Kindle tablets that have been better received, and it is looking to make a bigger splash with consumers by opening pop-up stores in San Francisco and Sacramento.

"The challenge will be in their ability to focus the selection of products around the needs of the market since it's impossible for Amazon to carry even a fraction of their online inventory in an actual store," says Michael Dill, Match Marketing Group's managing partner.

BIG SPEND

Amazon made a huge addition in the quarter, buying the popular video game tips and tricks site Twitch for $970 million.

As Amazon heads into its biggest time of the year, e-commerce is expected to hit $305.7 billion this year or 6.5% of all U.S. sales, up 16.5% from $264.3 billion in 2013, according to tracking firm eMarketer.

During the 2014 holiday season, eMarketer estimates e-commerce will account for $72.4 billion in the U.S., or 8.4% of all holiday season retail sales, compared with a 6.5% share of total retail throughout the entire year.

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