By Peter Kafka via AllThingsDYet another big-name Internet stock got punished for missing Wall Street’s expectations yesterday. This time it was Amazon, which reported lower operating margins for Q3 and — presumably more worrisome — the possibility of an operating loss in Q4.
But Amazon isn’t Netflix, which has to convince investors and consumers that its business isn’t fundamentally broken. Jeff Bezos and company have a much easier story to sell: Profits are down because they’re spending money on expansion.
A lot of the money is going into Amazon’s old business, CFO Thomas Szkutak explained on yesterday’s conference call — the company is building out dozens of new distribution centers to help it ship all the physical stuff its customers still order. And a lot of the money is going into its new digital business — in particular, the new Kindle Fire.
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