Amazon.com Inc.(AMZN) reported a sharp drop(-33%) in Q1 earnings, as the growing expenses offsetting a strong gain in sales. The No.1 online retailer spent aggressively to build more distribution centers and expand its technology infrastructure.
Amazon said first-quarter sales jumped 38% to$9.86 billion, but Q1 earning of $201 million($0.44 EPS), compared with the earnings of $299 million($0.66 EPS) in the same period last year, dropped 33%. The online mega store also predicted operating income in Q2 would decline, the shares fell 2.2% in after-hours trading , but later recovered, trading flat at last check.
Chief Financial Officer Tom Szkutak hinted they may have more investments to make as the retailer could build more fulfilment centers to keep pace with its growth. Amazon added 13 fulfillment centers in 2010. Although the expansion strategy has lasted longer than expected, analysts say the investment will likely pay off.
The company said it expects Q2 revenue in a range between $8.85 billion to $9.65 billion, compared with the $8.75 billion expected by analysts.
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