Amazon reports quarterly losses and warns of more to come

Pressure to diversify takes its toll on Amazon's numbers, despite a 22 per cent growth in sales

A lack of consumer confidence in Europe coupled with major investments in new areas of business has led Amazon to report second quarter losses of $7m (£4.6m), despite a 22 per cent rise in sales overall.

Over the April to June period, Amazon announced revenues of $15.7bn (£10.2bn), equating to a loss of $7m or a drop of two cents per share. This figure misses by some margin analysts' predictions of earnings of five cents per share, and Amazon shares fell by two per cent on the news.

Despite strong US sales, figures from the firm's international division were below expectations owing mainly to the weak economic picture in Europe. The rise in international sales of 13 per cent was not enough to make a profit.

Furthermore, the company announced that, despite a continued increase in sales, more losses are expected over the next quarter as it attempts to move away from its retail and distribution model towards providing a broad range of digital services, including its AWS cloud offering and the LOVEFiLM video-on-demand service, as well as its own Kindle tablets.

Amazon is also planning a strong expansion into China and other fast-moving economies, according to Tom Szkutak, Amazon's CFO.

"We're investing in a number of geographies including certainly China. We've been investing for several years. We continue to invest there. We think it's a great long-term opportunity but we're in investment mode, " he told investors.