Amazon reports second quarter loss and weak outlook

Amazon package Amazon is moving away from shifting goods to becoming a greater technological presence

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Online retail giant Amazon has reported it lost $7m (£4.56m) in the second quarter of the year.

The loss compares with a profit of the same amount for the same period last year and comes despite a 22% rise in sales to $15.7bn for the April to June quarter.

The company is trying to diversify away from simply warehousing and selling gadgets to providing a broader range of digital services.

Its shares fell by 2% on the news.

The online giant is spending billions trying to expand into a broader technology company, selling its Kindle tablet range along side cloud computing, video streaming and digital downloads.

For the coming quarter, Amazon forecast sales of between $15.45bn and $17.15bn, or an increase of between 12% and 24%, which was below analysts' expectations.

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Founder and chief executive, Jeff Bezos, said the emphasis on technology was clearly showing, with its Kindle tablet computer continuing to sell very well: "This past quarter, our top 10 selling items worldwide were all digital products - Kindles, Kindle Fire HDs, accessories and digital content."

But the firm has been affected by a lack of consumer confidence in Europe, where many countries are still in recession.

North American sales jumped by 30%, Amazon reported, but its international division saw sales rise by just 13%, and did not make a profit.

The loss, equivalent to about two cents a share, came as a surprise to many analysts, who had forecast a profit of five or six cents a share.

But investors have so-far appeared prepared to see Amazon's profits suffer in order to allow investment in digital media, and expansion in fast-growing markets such as China.

Tom Szkutak, Amazon's chief financial officer, told investors: "You should expect us to be in investment mode [in China] for some time."

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