Amazon loses $126 million while revenues soar

Although Amazon (NASDAQ:AMZN) increased sales by nearly a quarter over the previous year, the retailer still posted a net loss of $126 million for the second quarter. In a year in which Amazon launched a set-top box, an e-book subscription service and announced a new smartphone, it seems the bottom line was compromised to fund research and expansion.

Amazon's net sales were $19.34 billion, up 23 percent from the same quarter in 2013. These numbers surpassed Google (NASDAQ:GOOG) in the second quarter, which grew 22 percent, and eBay (NASDAQ:EBAY), which posted a 13 percent revenue growth, reported Bloomberg Businessweek.

However, the net losses were the biggest since 2012. Analysts suspect it's from the money founder and CEO Jeff Bezos is sinking into new programs such as same-day grocery delivery and developing smartphones. And there seems to be no slowing down any time soon. Just this month Babak Parviz, the creator of Google Glass, left Google to join the Amazon team, a sign that the retailer has plans for a wearable of its own.

"AWS continues to grow very strongly," reported Tom Szkutak, Amazon's CFO, after suggesting that financial numbers had stagnated because of price reductions. "Usage growth in Q2 was close to 90 percent year-over-year for the quarter."

Looking exclusively at Amazon's retail growth, gross profit was $4.78 billion, a 31 percent jump from last year, reported Bloomberg Businessweek.

Amazon continually tops consumer lists for online purchases. It recently ranked No. 9 on the National Retail Federation's top 10 retailers in the United States list, becoming the only pure e-commerce retailer to make the grade.

The company is predicting a continued net sales growth next quarter, expecting sales to reach between $19.7 billion and $21.5 billion, a 15 to 26 percent growth over last year. Operating losses are also expected to fall between $810 million to $410 million next quarter.

"We continue working hard on making the Amazon customer experience better and better," said Bezos, referring to the company's latest delivery improvements such as the start of Sunday delivery coverage for 25 percent of the U.S. population, European cross-border two-day delivery for Prime, the launch of Prime Music with more than one million songs, and the creation of three original TV series for kids.

"And today customers all over the U.S. will begin receiving their new Fire phones—including Firefly, Dynamic Perspective, and one full year of Prime—we can't wait to get them in customers' hands," Bezos said.

For more:
-See this Amazon press release
-See this Forbes article
-See this Bloomberg Businessweek article

Related stories:
Amazon offers incentives for Fire Phone apps
Amazon's wearable store gives category stamp of approval
Amazon launches Prime Pantry
New Amazon Fire takes aim at Apple
Amazon's Vine.com relaunches as online grocer with a twist

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