Kindle sparks Amazon profit fall

25 October 2011 Last updated at 22:40 GMT Amazon boss Jeff Bezos unveils the Kindle Fire last month

Profits at the online retailer Amazon have dropped 73% after the company invested heavily in the Kindle tablet computer.

The company, the world's largest online internet retailer, said third quarter net income was $63m (£40m, 45m euros).

During the period it launched the Kindle "Fire" model, which runs apps and streams films and other non-text content.

The results left Amazon shares down 12% in after hours trading.

The company said that sales had grown by 44% and that last month, on 28 September, it had its "biggest order day ever for Kindle, even bigger than previous holiday peak days".

It now offers four Kindle devices, including a 3G model.

Lower margins

Jeff Bezos, the founder and chief executive of Amazon, said: "In the three weeks since launch, orders for electronic ink Kindles are double the previous launch. And based on what we're seeing with Kindle Fire pre-orders, we're increasing capacity and building millions more than we'd already planned."

Amazon also forecast lower-than-expected sales for the next quarter, which includes the crucial Christmas period, and said it could even see an operating loss as it continues to invest in the Kindle Fire.

Amazon's profit margins have generally been lower than other technology firms, a situation that analysts say is now catching up with them.

"Investors have always given Amazon a hallpass to invest and it looks like they may have had their patience exhausted," Lawrence Haverty from Gamco Investors told the BBC.

"Its operating margin is only 4%. Most technology companies need an operating margin of over 20% so I think investors are asking themselves if the business will ever really be profitable," he said.

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Wind turbine maker back in profit

17 August 2011 Last updated at 11:59 GMT Vestas expects to deliver a lot more energy-generating capacity this year than in 2010 Shares in Vestas, the world's largest wind turbine maker, have jumped 23% after the company reported a strong order book and a return to profit.

Net profit for the second quarter was 55m euros ($80m; £48m), compared with a loss of 143m euros a year earlier. Revenue rose by 36% to 1.4bn euros.

The company suffered heavy losses in the first quarter.

Vestas said it expected to deliver 50% more energy capacity this year compared with 2010.

"Despite global uncertainty, we feel that Vestas is in a good position to get the order intake that we have outlined," said chief executive Ditlev Engel.

The Denmark-based company currently delivers about 40% of the world's offshore turbines.

In October last year, Vestas was forced to announce plans to cut 3,000 jobs, or 15% of its workforce, due to weak demand for wind turbines.

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Oil price rise lifts Exxon profit

28 July 2011 Last updated at 13:11 GMT Rex Tillerson says that his firm is investing at record levels to meet oil demand US oil giant Exxon Mobil has reported a rise in quarterly profits on the back of higher oil prices.

The company said that net profit rose to $10.7bn (£6.6bn) for the three months to June, up 41% from the same period last year.

The profit was its largest since the third quarter of 2008. The firm said production had risen by 10%.

Higher oil prices have also boosted rivals such as Royal Dutch Shell, which reported a 77% jump in profits.

The price of oil has surged in the past year, driven by political unrest in oil-producing countries.

The price of a barrel of benchmark US light sweet crude oil is up to around $97 a barrel currently, from $78 a year ago.

Record demand

Exxon said its increase in production had been driven by its fields in Qatar and its gas portfolio.

Chairman Rex Tillerson said the company was "investing at a record level of over $10bn to develop new supplies of energy to meet growing world demand".

In the quarter, Exxon announced two new oil discoveries and a gas field in the Gulf of Mexico after drilling the company's first deepwater exploration well since a moratorium on drilling in the area ended.

The moratorium was put in place following the huge oil spill last summer from the Deepwater Horizon well.

Earlier this week, BP announced second-quarter profits of $5.3bn.

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Samsung profit dips on low demand

29 July 2011 Last updated at 05:27 GMT Falling demand for LCD televisions has hit profits of electronics manufacturers in Asia Samsung has become the latest electronics maker to report a drop in profits due to a weak demand for TVs.

Samsung said net profit was 3.5tn won ($3.3bn; £2bn) in the second quarter, an 18% drop from a year earlier.

The company said its TV unit made a loss for the second successive quarter as sales of Liquid Crystal Display's (LCDs) fell 15%.

On Thursday, Sony reported a loss of $199m for the first quarter due to falling TV sales.

Analysts said weak demand for TVs would continue to hurt its profits in the short term.

"It will be difficult to boost earnings sharply in the third quarter as demand for memory chips and TVs will continue to remain depressed," said Song Myung-sup, an analyst at HI Investment & Securities.

"Its loss-making flat-screen business will also report break-even at best," he added.

However, the company reported robust growth in its mobile phone business with a 43% surge in sales.

Profits in the telecom unit rose by 6.3% from a year earlier to 1.7tn won.

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Nintendo shares dive on crumbling profit outlook

TOKYO | Fri Jul 29, 2011 12:15am EDT

TOKYO (Reuters) - Nintendo Co Ltd's shares plunged on Friday, wiping off as much as $5 billion of the videogame maker's market value, after it slashed its full-year profit forecast to the lowest level in 27 years.

Profits are set to shrivel after Nintendo was forced to cut the price of its 3DS handheld games device to try to jumpstart weak sales, just six months after launching the gadget that it hoped would replicate the success of the previous generation DS.

Shares of the Kyoto-based firm hit 11,100 yen, its lowest intraday level since May 2004 before recovering to trade down about 15 percent in early afternoon.

Nintendo slashed its annual operating profit forecast in after-market hours on Thursday to 35 billion yen from an initial forecast of 175 billion yen. The new estimate is far short of the previous consensus of 154.9 billion yen based on 24 analysts' forecasts ahead of the results.

"They are standing on the edge," said Yuuki Sakurai, CEO and president of Fukoku Capital Management in Tokyo. "When I ride on the trains I see people using their smartphones to play games and people don't want to overlap their spending on other devices," he said.

Nintendo must consider providing games to these new platforms rather than focusing on new hardware, Sakurai added.

Nintendo also cut sales forecasts for its Wii home games console and the previous generation DS handheld device.

The Wii is facing harsh competition from rival Microsoft's Xbox, while many casual gamers are turning to devices like Apple's iPhone and iPad, rather than dedicated games gadgets.

JP Morgan cut its rating on the firm behind the Super Mario franchise to "underweight" from "overweight," saying the current situation was worse than feared and the outlook uncertain.

"The timing of the 3DS hardware price cut is surprising, given the major in-house software releases... We believe the 3DS will be a heavy weight on earnings over the medium term. The lack of a share buyback announcement is also disappointing," analyst Hiroshi Kamide said in a report.

STIFF COMPETITION

Shares of Sony Corp also fell on Friday, a day after the Japanese consumer electronics firm slashed its outlook for TV sales and cut its full-year net profit forecast to 60 billion yen from 80 billion yen.

Brokerage CLSA cut its rating of Sony to "underperform" from "outperform" and lowered its target share price to 2,150 yen from 2,430 yen, saying the downgrade reflected "the stronger headwinds from LCD panel and TV overcapacity as well as the strengthening yen."

Sony, the maker of Bravia TVs, slashed its annual forecast for LCD TVs to 22 million from 27 million and warned that annual losses in the division might widen from the previous year.

By midmorning Sony shares were down 2 percent at 1,973 yen, while the benchmark Nikkei was down 0.1 percent ($1 = 77.800 Japanese Yen)

(Reporting by Isabel Reynolds, James Topham, Ayai Tomisawa, Mariko Katsumura and Tim Kelly; Editing by Muralikumar Anantharaman and Anshuman Daga)

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Expedia profit up as bookings grow 19 percent

CHICAGO | Thu Jul 28, 2011 5:06pm EDT

CHICAGO (Reuters) - Online travel agency Expedia Inc said its quarterly net profit rose as bookings increased by 19 percent.

The company said on Thursday that its second-quarter net profit amounted to $140 million, or 50 cents per share, compared with 114 million, or 40 cents per share, a year ago.

Excluding one-time items, Expedia earned 55 cents per share, beating a Wall Street consensus forecast for 49 cents per share, according to Thomson Reuters I/B/E/S.

The value of the company's bookings rose 19 percent to $8 billion. Domestic bookings increased 10 percent and international bookings increased 37 percent.

Expedia cited especially strong growth in hotel bookings, up 21 percent. The company also said its advertising and media revenue jumped 27 percent.

Shares of Expedia rose 7.1 percent to $31.05 in aftermarket trading from a closing price of $28.99 on Nasdaq.

Expedia, which competes with Priceline and Orbitz Worldwide, said in April that it plans to split into two publicly traded companies through a proposed spin-off of its TripAdvisor business.

The company has said the proposed spin-off of TripAdvisor is expected to be completed in the third quarter.

Expedia also recently announced a partnership on a travel website with online coupon service Groupon Inc.

(Reporting by Kyle Peterson; Editing by Tim Dobbyn)

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Samsung profit outlook weakens on chips, mobiles strong

By Miyoung Kim

SEOUL | Fri Jul 29, 2011 12:17am EDT

SEOUL (Reuters) - Samsung Electronics Co is relying on the smartphone market to boost group profits after its flat screen unit reported a second quarter of losses and the mainstay chip business struggled.

The South Korean technology conglomerate joins a host of global companies in warning that fragile consumer demand is hurting sales of TVs, flat screens, computers and semiconductors.

"Samsung's earnings momentum will revive in Q3, but the recovery will not be strong because of weak economies in the U.S. and Europe," said Lee Dong-Jin, fund manager at KTB Asset Management." There are also no new IT applications that can drive demand as Apple's iPhone and iPad did."

Samsung, which reported operating profit fell 25-percent from a record, warned of a challenging business outlook. Falling chip prices are the biggest concern for the South Korean company as it earned half of its profit from semiconductors in the second quarter.

On Thursday, Sony Corp and Panasonic Corp also warned of weak TV sales, especially in the United States and Europe, following Philips and Corning Inc in highlighting anemic demand.

Samsung is however betting big on its mobile phone business as it rolls out new versions of tablets and phones, helping it capture market share from Research in Motion and Nokia.

Samsung's shares, which hit a record high in late January, have lost 12 percent so far this year, while the broader KOSPI has gained 5 percent.

The company boasts a market capitalization of $134 billion, bigger than the combined value of Sony, Nokia, Toshiba Corp, Panasonic and LG Display.

Samsung, also the world's No.2 maker of mobile phones, reported a 3.75 trillion won ($3.6 billion) operating profit for April-June, versus the consensus forecast for a 3.7 trillion won profit according to Thomson Reuters I/B/E/S.

The result was broadly in line with Samsung's estimate earlier this month for an operating profit of between 3.5 trillion won and 3.9 trillion won.

Its operating profit compares with 2.95 trillion won in the preceding quarter and a record 5.01 trillion won a year ago.

Samsung's display business reported a second consecutive quarterly operating loss of 210 billion won, little changed from 230 billion won loss in the previous quarter.

"It will be difficult to boost earnings sharply in the third quarter as demand for memory chips and TVs will continue to remain depressed," said Song Myung-sup, an analyst at HI Investment & Securities. "Its loss-making flat-screen business will also report break even at best."

The operation vies for the top position with local rival LG Display. Each company has about one-quarter of the global market, which is grappling with oversupply and weak demand.

TELECOMS DIVISION GAINS

Operating profit from its telecoms division more than doubled to 1.67 trillion won from 630 billion won a year ago, helped by strong sales of a new version of its flagship smartphone Galaxy S.

Sales of the Galaxy S II have topped 5 million units since its launch in late April.

Samsung did not provide sales number of its handsets but said shipment rose by high single digit percent from the previous quarter's 70 million units.

The company is widely expected to close the gap with top-ranked Nokia, which sold 88.5 million handsets in the second quarter and may have overtaken the Finish firm and Apple to become the world's top smartphone maker, analysts said.

Operating profit from semiconductor business fell 11 percent to 1.79 trillion won and Samsung warned of weak shipment growth in the third quarter on a grim outlook for PC sales.

Contract prices of dynamic random access memory (DRAM) chips tumbled 16 percent in July alone, according to price tracker DRAMeXchange and analysts expect prices will fall further until August.

Despite its worsening business outlook, Samsung promised to increase its semiconductors investment, which it had forecast at around 10.3 trillion won, to widen the technology gap with smaller rivals.

(Additional reporting by Hyunjoo Jin; Editing by Jonathan Hopfner and Anshuman Daga)

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