Internet retailer Amazon's second-quarter income plummeted from the same period a year earlier as it cut prices and invested in new technology, the company reported on Tuesday.
Amazon's net income for the quarter ending June 30 was 22 million dollars, or five cents a share, as compared to 52 million dollars, or 12 cents per share, in its second quarter last year, according to the company.
The results disappointed Wall Street analysts who had anticipated earnings of seven cents per share.
In after hours trading Amazon's stock price was down more than 13 percent from the previous day at 29.83 dollars a share. The earnings report was released after the stock market closed for regular trading.
Amazon highlighted that lower prices and free shipping had spurred an increase in sales and that the number of memberships at the website had doubled since the end of 2005.
Sales in the second quarter of this year increased 22 percent, to 2.14 billion dollars, compared to 1.75 billion dollars in the same period in 2005, according to the Seattle, Washington, company.
Operating income plunged 55 percent to 47 million dollars in the second quarter, compared with 104 million in second quarter 2005, Amazon reported, attributing the decline to technology and content investment, lower prices, free shipping, the Amazon Prime program, and the 20 million dollar cost of a contract termination and related fee dispute.
Amazon Prime lets people pay 79 dollars annually for free two-day shipping of orders.
"We're investing in Amazon Prime and future technology initiatives," Amazon chief executive Jeff Bezos said in a release.
"Our investments in technology position us to innovate in seller platforms, web services, and digital. We're looking forward to the coming decrease in our year-over-year growth rates in technology spending in the second half of 2006."
