Amazon Bleeds Value As Microsoft Delights

Shareholders headed for the fulfillment centre exit door on Thursday night as Amazon posted disappointing numbers, though Microsoft (NasdaqGS: MSFT - news) investors had more to cheer.

Amazon's stock price tumbled 11% in after-hours trading in New York - the result of a deepening quarterly loss of $437m (£272m) compared to a figure of $41m in the same period last year.

Revenue jumped to $20.6bn from $17.1bn.

The profit performance is explained by the world's largest online retailer's decision to keep investing heavily in its offering and new products at the expense of returns for shareholders.

Its forecast for Christmas sales was also cited by analysts as a reason for the latest sell-off, with Amazon stock already 22% lower this year.

The company said it expected holiday revenue of between $27.3bn and $30.3 billion - below expectations.

Amazon launched a smartphone, the Fire, earlier this year and has been offering a set-top video streaming device, a streaming video service and several tablets and e-book readers.

The company has also been investing in services for its loyalty programme, Prime, adding grocery delivery services and music streaming for Prime members as well as offering original TV shows such as the critically acclaimed "Transparent" starring Jeffrey Tambor.

It confirmed in August plans to buy the video game streaming service, Twitch, spending the best part of $1bn on the acquisition.

But it is increasingly clear that what investors want more than revenue growth, is a solid profit.

In a conference call with analysts, chief financial officer Thomas Szkutak defended its strategy and said the company is focused on "using its capital wisely so that over time we get good returns on invested capital."

Rival Microsoft's quarterly figures were well received in comparison.

The tech firm's profit and revenue sailed past expectations as chief executive Satya Nadella ' s push to embrace cloud computing and diversify into mobile devices helped lift sales by 25%.

Revenue from cloud services, including software delivered over the Internet, more than doubled last quarter at a time when some of Microsoft's better-known segments are slowing.

Shares (Berlin: DI6.BE - news) jumped over 3% in after-hours trading having risen 33% in the past 12 months.

Microsoft still makes most of its money from selling traditional software for businesses and home computers but Nadella wants a shift towards software that can be easily accessed online and on the move.

The company confirmed it was to ditch the Nokia name on smartphones following the firm's purchase of the brand.

Costs related to the acquisition ate into profits to the tune of almost $1bn, with net income of $4.54bn supported by strong sales of Surface tablets and Xbox gaming consoles.