Although Amazon Company operates online, and as an online company one would expect the company to make profits rather than making losses, the company has from time to time been making losses. For example, back in 2000, the company made a loss of $1.4 billion. In 1999, the company made a loss of $0.7 billion while in 1998, the company made a loss of $0.1 billion (Betz 131). In recent years, the company made a loss of $241 million in 2014 (Geuss Para. 2).
From a financial viewpoint, Amazon Company may be making losses because the company focuses much of its attention on investment without necessarily evaluating their returns. With regard to this issue, Betz claims that the company’s strategy has all along been that of building market shares without necessarily building resourceful operations aimed at making profit (Betz 132). According to Betz, the company made loss back in 2000 because of its British and German units. In addition, the company made loss the same year because it engaged in new business ventures that were not profitable (Betz 131). To date, the company has been doing this even though not in purchasing equipments and buildings. In particular, the company has been expanding its business ventures without necessarily evaluating their profitability. This could be among the reasons for the losses in the company. In terms of retained earnings, Amazon Company could be spending much of its income on purchasing equipments, building and paying rent. As the case has been, the company could be spending much of its revenue on non-profitable ventures. As a result, expenses could be exceeding revenues thereby resulting to a net loss. The net loss could in return be decreasing retained earnings as it was the case in 2007 (Kimmel, Weygandt and Kieso 569).
Betz, Frederick. Executive Strategy: Strategic Management and Information Technology. New York: J. Wiley, 2001. Print.
Geuss, Megan. Amazon reports modest Q4 earnings and 2014 loss, but stock soars. January 30, 2015. Web. 14 April 2015. From http://arstechnica.com/business/2015/01/amazon-reports-modest-q4-earnings-and-2014-loss-but-stock-soars/
Kimmel, Paul, Weygandt Jerry, and Kieso Donald. Accounting: Tools for Business Decision Making. Chichester: John Wiley, 2008. Print.