Amazon Picks Growth Over Profits in Spending Spree

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July 26 (Bloomberg) -- Bloomberg's Scarlet Fu reports that Amazon.com chose to fuel sales growth at the expense of profits as continued spending on warehouses and digital content resulted in a surprise second-quarter loss. She speaks on Bloomberg Television's "Bloomberg Surveillance."

The businesses but spending is the big culprit.

Put the loss of the context -- this is the second quarter of losses in less than a year and it is amazing amazon can report a net loss of $7 million while booking almost $16 billion of sales, up 22% from last year.

In terms of the spending, the ceo is spending on the network of warehouses, devices like the kindle, cloud computing, data centers.

Also tv shows and movies, trying to compete with netflix.

I do use the amazon video.

A huge library.

I think it is refreshing companies are actually investing in themselves again.

Revenues can do it alone anymore.

Companies have been cutting costs, cutting people, cutting investment, and they have been making profit.

Here is a company actually investing.

Let's just get a chart of amazon.

Mark from citigroup talks about notable callouts, things that were positive.

Besides profits -- you need profits?

Nobody.

What were the call outs you saw?

Operating margin up half a percent, which narrows.

But if you want to look at gross margin, the difference between what things cost amazon and what they sell for and not affected by how much amazon spend or invest in itself.

The fact gross margin has been up and in the last quarter rose up to 28.6% from 20 one percent is a good sign of profit to come.

Nela richardson is not the only one who likes his strategy.

55 times forward earnings versus 16 times over at ebay.

They have given amazon a hall pass and will continue to do so.

But at some point amazon will be under pressure to show whether they can comfort it -- converted to profit.

Paul barrett from "bloomberg businessweek." is print going to go away as we have an amazon digital world?

I do not think it will go away across the board.

I buy books.

And you go to the bookstore to see what you want to buy, even if you are going to buy it on amazon.

I know i do.

I also write a books , so i am deeply invested.

What did you learn writing "glock"? they are no longer competitors, but interlocked.

People go to the bookstore to see what is out there.

They may buy one book at the bookstore and then go back to subsequent month or two months and by the other books from amazon.

What i thought was interesting is how much amazon highlighted all the digital content acquisition.

Tv shows, movies.

In the press release, the first 10 highlights were all about the different shows it got.

And a thing about the groceries?

It did not really get a high mention.

It is still something they are working on.

In the experimental phase.

I can't wait for "game of thrones" -- is it season three?

On amazon.

I am way behind.

This text has been automatically generated. It may not be 100% accurate.

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