Amazon takes Q3 hit as it eyes tablet domination

Online giant sees net profit plunge 73 per cent as it invests for future growth

Amazon suffered a 73 per cent drop in third-quarter net profit as it gears up for a tablet war in the fourth quarter.

The online giant revealed a 44 per cent increase in sales to $10.88bn (£6.8bn) in the quarter ended 30 September.

But operating profit was $79m in Q3, compared with $268m in Q3 2010, and net profit dropped 73 per cent to $63m compared with the previous year – mainly due to its investment in tablet development and new fulfillment/distribution centres.

Jeff Bezos, founder and chief executive of Amazon, zoned in on the firm’s Kindle range, particularly its brand new Fire tablet (pictured).

“In the three weeks since launch, orders for electronic ink Kindles are double the previous launch. And based on what we are seeing with Kindle Fire pre-orders, we are increasing capacity and building millions more than we had already planned,” he said.

Looking ahead to Q4, the firm said it expects sales to be between $16.45bn and $18.65bn – with growth of between 27 and 44 per cent. Operating loss is expected to be a whopping $200m to $250m – or between a 142 per cent and 47 per cent decline compared with Q4 2010.