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Amazon shares fall despite growth | Amazon shares fall despite growth |
(about 10 hours later) | |
Shares in Amazon fell in New York despite the online retailer reporting strong profit and sales growth in the first three months of 2008. | |
Over the period, Amazon's net income rose 30% to $143m (£72m) which was better than expected. | |
But there was concern about what would happen to its profit margins later in the year if prices have to be cut to attract hard-hit US consumers. | But there was concern about what would happen to its profit margins later in the year if prices have to be cut to attract hard-hit US consumers. |
Nervous investors sent Amazon shares down $3.30, or 4%, to $77.70. | |
It's a good revenue story, but the margins are not expanding as the more bullish people have been hoping Martin Pyykkonen, Global Crown Capital See Amazon's share price | |
"Our sales growth this quarter was driven by low prices and millions of in-stock items available for immediate shipment," said Jeff Bezos, Amazon founder and chief executive. | |
But there are worries that stiff price competition will see an erosion of earnings despite impressive revenue growth. | |
'Price competition' | 'Price competition' |
"It's a good revenue story, but the margins are not expanding as the more bullish people have been hoping," said Martin Pyykkonen at Global Crown Capital. | "It's a good revenue story, but the margins are not expanding as the more bullish people have been hoping," said Martin Pyykkonen at Global Crown Capital. |
"They are indicating they can sell more, and they are selling more, but presumably in here there is a lot of price competition." | "They are indicating they can sell more, and they are selling more, but presumably in here there is a lot of price competition." |
Amazon's chief financial officer Tom Szkutak said that he had not seen evidence of US shoppers changing their habits ahead of a possible recession. | Amazon's chief financial officer Tom Szkutak said that he had not seen evidence of US shoppers changing their habits ahead of a possible recession. |
But analysts said there were signs that the business outside the US was being forced to cut prices as it attempted to move into new areas. | But analysts said there were signs that the business outside the US was being forced to cut prices as it attempted to move into new areas. |
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