Amazon’s losing profits dramatically

As it became known, Amazon.com Inc's quarterly profit fell, diminishing its shares by 14%. The online auction site’s profits dropped injured by 40% surge in expenses to $6.3 billion and by price cuts on its Kindle electronic reader.

Amazon.com spent much more than investors had expected on everything from new staff to fulfillment centers, as it takes a bigger bite out of the traditional retail industry led by the likes of Wal-Mart Stores.  Inc.

Besides, Amazon’s lead in e-readers was pressured by successful introduction of Apple's iPad. The largest global online retailer does detail how many Kindles it has sold. However, the company announced yesterday the growth rate on e-readers sales tripled after it cut prices on them.

Apple has sold 3.27 million iPads and was pricing the device aggressively as it tries to define the nascent tablet market.

According to the opinion of Frederick Moran, analyst at Benchmark Co, the online retailer suffered from losing its profits, as it had to slash the price on the Kindle due to strong competition vs iPad.

Moran also added that the company's outlook for the third quarter is low, though Amazon has a reputation for being conservative in its view of future results.

Amazon's Q2 net income rose by 45% to $207 million, or 45 cents per share, from $142 million, or 32 cents per share, a year earlier.