Amazon loses $126 million despite higher sales

Shares of e-commerce company Amazon fell Friday after the company's quarterly results showed the company is losing money despite increasing sales.

Shares in Amazon lost just over $40 US to dip to $318 US in trading on the Nasdaq Friday. That's down about 11 per cent from where they were when the stock market closed on Thursday, before the numbers came out.

Amazon posted a loss of $126 million, or 27 cents per share, compared with $7 million, or 2 cents per share, in the same quarter a year earlier. Analyst consensus was for the company to lose about 13 cents per share.

Revenue, however was up sharply, rising 23 per cent to $19.34 billion from $15.7 billion in the same quarter a year earlier. 

Investors are usually accepting of Amazon's thin profit and focus on its strong revenue growth. But not this quarter.

Reports that show Amazon is losing money are nothing new, as the company is focusing on spending the money it makes to grow and expand into new areas. In one of its most high-profile moves, Amazon is introducing its own smartphone, the Fire, which starts selling Friday. The company has also had early successes with its Amazon Prime service, in which customers pay $99 per year to guarantee two-day delivery for items.

The company doesn't disclose how many Prime members there are, but it said it added more Prime members in the second quarter than it did in the second quarter last year, despite the fact that it raised the cost for Prime by $20 earlier this year.

Amazon also added grocery delivery and streaming music to its growing collection of services. Amazon's results come as the company is in a public squabble with publisher Hachette, reportedly over e-book prices. Amazon did not give an update about the talks.

Amazon shares have dropped 10 per cent in 2014, while the Standard & Poor's 500 index has climbed 7.6 per cent.