Amazon's investment went wrong: Fire Phone A Big Flop Amount For $174M Loss
Amazon founder Jeff Bezos' fortune recently lost $2 billion.
Fire Phone was unveiled by the company during an event at Fremont Studios in Seattle, Wash. on June 18, 2014. and went on sale with AT&T (T) in the summer of 2014
But was it worth the hype and investment?
In its third quarter Amazon.com Inc posted a $437 million net loss i.e. a loss of 95 cents a share, more than the estimation of 74 cents per share on Thursday.
Amazon provided guidance of $27.3 billion to $30.3 billion, while Wall street expected $30.39 billion. Amazon projected for a growth of fourth quarter sales of 7 percent to 18 percent in comparison with fourth quarter of 2013.
The company also lost the street's revenue estimates and conferred on a not up to scratch stance. The stock run down 11 percent in after-hours trading after already been dropped down to 20 percent this year.
After three months of the big letdown in July, the warning may come as an inclination for the investors who are by now cagey of a triple-digit price-earnings ratio and a obstinate reluctance to curb back spending.
Amazon's continuous assurance to the investors with huge revenue growth turning to profits is completely disintegrating. It has also concentrated in regions like hardware, media, advertisement and cloud services.
In its third quarter, it spent $2.64 billion on fulfillment, 29 percent greater than compared to the same duration last year. It also enhanced in different categories like apparel, geographic expansion, devices like Kindle Fire tablets and Kindle e-readers.
Time does not seem to be favoring e-commerce giant Amazon's CEO Jeff Bezos these days, as the last category cost the company a huge amount.
The fire phone proved to be a big flop and a big loss for the company. Chief Financial Officer Tom Szkutak revealed on a conference call with investors that the company took a charge of $170 million as the write-down of charges linked with its smartphone.
Post two months, the smartphone went from $200 to 99 cents with a two-year contract. Amazon flaunted the phone's skill of identifying objects at the press of a button making a 2-D picture look like they're in 3-D. Launched in the already dominated market where customers have many choices the smartphone does not provide any useful unique features to the users. Being exclusive to AT&T and inappropriate pricing might be the chief cause of the device's failure.
'There are a lot of reasons it failed, but they key is that Amazon provided no good reason for consumers to buy it,' explained one of the analysts.
'As we get ready for this upcoming holiday season, we are focused on making the customer experience easier and more stress-free than ever,' said Bezos showing a sign of optimism. 'In addition to our already low prices, we will offer more than 15,000 Lightning Deals with early access to select deals for Prime members, hundreds of millions of products across dozens of categories, curated gift lists like Holiday Toy List and Electronics Holiday Gift Guide, new features like #AmazonWishList, and a great new lineup of products like Kindle Voyage and Fire HD Kids Edition.'
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