Amazon may be taking over the world — but it's not hitting its earning projections

Jeff Bezos' giant is expanding into groceries, pop-ups, drone delivery, and India — but its profits are way down

By Matthew Rozsa

Staff Writer

Published October 28, 2016 5:45PM (EDT)

  (AP/Reed Saxon)
(AP/Reed Saxon)

On Thursday Amazon posted third quarter profits that were far below industry expectations, triggering a ripple effect of negative consequences for the company.

Thanks to rising shipping costs and other investments in its own company, Amazon's $32.7 billion in sales were almost entirely offset by $32.1 billion in operating expenses. Shipping costs alone were $3.9 billion, a quarterly increase of 43 percent. Fulfillment costs (the large warehouses where Amazon products are stored) were $165 million, a quarterly increase of 35 percent. That said, Amazon Web Services saw its profits spike by 55 percent to $3.23 billion.

As a result of this news, Amazon's stock shares fell 4.3 percent in after-hours trading. Amazon didn't help matters by also announcing that spending on shipping, warehouses, and video production will most likely eat into its fourth quarter profits as well. It anticipates operating income to range from nothing to $1.25 billion at that time.

Amazon has spent the past year or so implementing an ambitious new vision for the company. They are developing their own shipping business so they can eventually deliver their own packages, plan on opening up to 100 pop-up stores in U.S. shopping malls, and are even rumored to be supplementing its grocery delivery service with a series of real-world grocery stores. They are also planning on expanding heavily into India, which Amazon believes to be a burgeoning market.

It remains to be seen whether Amazon's aggressive expansion, both within and outside of the United States, will ultimately make this disappointing quarter worth it.

By Matthew Rozsa

Matthew Rozsa is a professional writer whose work has appeared in multiple national media outlets since 2012 and exclusively at Salon since 2016. He received a Master's Degree in History from Rutgers-Newark in 2012, was a guest on Fox Business in 2019, repeatedly warned of Trump's impending refusal to concede during the 2020 election, spoke at the Commonwealth Club of California in 2021, was awarded a science journalism fellowship from the Metcalf Institute in 2022 and appeared on NPR in 2023. His diverse interests are reflected in his interviews including: President Jimmy Carter (1977-1981), Israeli Prime Minister Ehud Barak (1999-2001), animal scientist and autism activist Temple Grandin, Secretary of State Madeleine Albright (1997-2001), director Jason Reitman ("The Front Runner"), inventor Ernő Rubik, comedian Bill Burr ("F Is for Family"), novelist James Patterson ("The President's Daughter"), epidemiologist Monica Gandhi, theoretical cosmologist Janna Levin, voice actor Rob Paulsen ("Animaniacs"), mRNA vaccine pioneer Katalin Karikó, philosopher of science Vinciane Despret, actor George Takei ("Star Trek"), climatologist Michael E. Mann, World War II historian Joshua Levine (consultant to "Dunkirk"), Washington Gov. Jay Inslee (2013-present), dog cognition researcher Alexandra Horowitz, Libertarian presidential candidate Gary Johnson (2012, 2016), comedian and writer Larry Charles ("Seinfeld"), seismologist John Vidale, Democratic vice presidential nominee Joe Lieberman (2000), Ambassador Michael McFaul (2012-2014), economist Richard Wolff, director Kevin Greutert ("Saw VI"), model Liskula Cohen, actor Rodger Bumpass ("SpongeBob Squarepants"), Senator John Hickenlooper (2021-present), Senator Martin Heinrich (2013-present), Egyptologist Richard Parkinson, Rep. Eric Swalwell (2013-present), Fox News host Tucker Carlson, actor R. J. Mitte ("Breaking Bad"), theoretical physicist Avi Loeb, biologist and genomics entrepreneur William Haseltine, comedian David Cross ("Scary Movie 2"), linguistics consultant Paul Frommer ("Avatar"), Maryland Gov. Martin O'Malley (2007-2015), computer engineer and Internet co-inventor Leonard Kleinrock and right-wing insurrectionist Roger Stone.

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