Amazon.com, Inc. (NASDAQ:AMZN) may be biting off more than it can chew.
Jonathan Geller, founder of BGR.com, said in a discussion on CNBC that the company may be getting into more fields than it can handle.The comment was made after Amazon.com, Inc. (NASDAQ:AMZN) reported a third quarter performance that highlighted just how much the company is spending as it recorded a massive operating loss of $544 million, compared to a $25 million loss in the year-ago quarter, despite sales burgeoning to $20.6 billion, a 20% increase compared to the same quarter last year.
“I just think that what they are trying to do in terms of getting into new areas is a lot more difficult now. Instead of spending $10 million to undercut a competitor that they are going to end up acquiring anyway, they have to spend billions of dollars for TV content alone,” Geller said.
A long-standing criticism for Amazon.com, Inc. (NASDAQ:AMZN) has been its massive spending. Despite posting impressive revenue, the company doesn’t return a profit as evidenced by its performance in the July to August quarter. For the fourth quarter of the year, the company is expecting sales between $27.3 billion and $30.3 billion, a growth of 7% to 18%, but an operating loss between $430 million and $570 million.
“When you look at the verticals that they are trying to get into and the big boys they are trying to play with, they are now smaller fish in a big sea. When you look at them competing with Apple, Samsung, Hulu, Netflix, HBO and Comcast, these are big companies that have big budgets [and]they have all the things Amazon wants and I don’t think [Amazon] can afford to leap into those categories and play with them,” Geller noted.
Nonetheless, William George of the Harvard Business School remains bullish on Amazon.com, Inc. (NASDAQ:AMZN) and its founder Amazon Bezos. He said that Bezos is a true visionary and that the company is undergoing a major shift in terms of being a software content services provider to a hardware provider as well and online retailing into a media and information company.
Amazon.com, Inc. (NASDAQ:AMZN) shareholders includes John Griffin’s Blue Ridge Capital which reported 810,000 shares in the company by the end of the second quarter.