Amazon.com Inc., the largest Internet retailer, dropped in extending trading after a report showed price cuts on the Kindle and record capital spending are taking a toll on profit.

Operating income in the current period will be between $210 million and $310 million, Amazon said in a statement. Analysts surveyed by Bloomberg had forecast operating profit of $361.6 million.
Amazon’s second-quarter per-share profit also missed analysts’ predictions.
Under Chief Executive Officer Jeff Bezos, capital spending ballooned to $196 million last quarter as Amazon.com built more warehouses to help ship a growing array of products that range from books to car parts. He’s also adding data centers to beef up a business of providing computing services to companies.
The “companies that pulled back in the downturn are now accelerating their investments,” said Colin Gillis, an analyst at BGC Partners LP. He has a sell rating on Amazon.com. “I don’t think Amazon is focused on any one quarter’s performance. They’re building for the future.”
The jump in capital spending was the largest year-over-year increase for the second quarter since 2005.
(Source: Bloomberg)