Friday, 24 October 2014

Disappointing Fire Phone sales costs Amazon big

We just got done looking at Microsoft’s latest earnings statement, and while the mobile side of things didn’t reveal any game-changing success stories, we did see some quite solid growth. Not everyone’s faring quite so well, and earlier today Amazon reported a quarterly loss of $437 million. Now some new details about just where it lost money are coming in, and to the surprise of essentially no one, the Fire Phone is a big part of what’s dragging the company’s finances down.
Amazon reports taking a $170 million write-down on the smartphone; as opposed to a write-off, where something is declared essentially worthless, a write-down is instead a recognition that assets have substantially decreased in value.
While the full picture of the Fire Phone’s impact on Amazon’s business isn’t being disclosed, the company does note that it has some $83 million of Fire Phone inventory sitting around – and we don’t have to tell you that it gets harder and harder to sell an aging phone (particularly a poorly received one) as time goes on.
Amazon’s already dropped Fire Phone prices to essentially free on contract for the 32GB model ($100 for 64GB) or $450/$550 for the full-price 32GB/64GB edition – those are down from $200/$300 on-contract and $650/$750 full-price atthe time of the phone’s launch back in June. Can it lower things any further in order to promote sales, or is the Fire Phone really dead in the water?
Source: Amazon
Via: CNE
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