Amazon struggles to make money

Amazon.com is struggling to make money as quickly as it spends it, putting the squeeze on the online retailer's latest financial results and crimping its outlook, The Wall Street Journal reports.

The Seattle-based e-commerce giant last week said its fourth-quarter revenue rose 35% from a year earlier, but profit plunged 57% as the company continued to spend on warehouses, technology and its Kindle electronic devices.

Amazon's operating expenses rose 38% in the quarter from a year earlier. The company also forecast lower-than-expected sales in the current quarter, estimating first-quarter revenue of $12 billion to $13.4 billion.

Amazon got less revenue from digital media than anticipated, especially in the videogame market, Bloomberg notes.

The company is also relying more on third-party sellers, which can bolster profit but generate less revenue than direct sales.

The Internet retailer has conditioned investors to expect stronger growth, making the latest results disappointing, says Colin Gillis, an analyst at BGC Partners LP, in New York.

In December, Amazon.com caused an uproar by encouraging customers to use a price-checking app on Main Street and in the malls, and then return to Amazon for a better deal, The New York Times notes.

Booksellers, who have long felt themselves in the retailer's cross hairs, were particularly offended. A tentative “buy local” movement sprang up.

In its earnings release, Amazon also warned that it could lose money in the current quarter, offering a range between $100 million in operating income and a $200 million loss.