Amazon shares fall 12 percent

27.10.2011
Amazon reported weaker than expected forecasts for the pre-Christmas season causing a 12 percent stock fall and shocking investors on Wednesday.

The weaker outlook was attributed to the investment Amazon had spent on its new Kindle Fire tablet computer.

The stock tumbled 12 percent Tuesday in extended trading as the news raised concern that Amazon was losing some of the revenue momentum that had helped investors overlook its razor-thin profit margins.

Amazon forecast fourth-quarter revenue of $16.34 billion (£10.19 billion) to $18.65 billion, compared with analysts' average estimate of $18.15 billion as compiled by Thomson Reuters I/B/E/S.

Amazon's forecast would mean 27 to 44 percent growth from a year earlier. In the third quarter, sales grew 44 percent, less than the 51 percent gain in the second quarter.

The company also said it could report a $200 million operating loss to a $250 million operating profit in the holiday quarter as it spends on the Fire and other initiatives.