Amazon Takes $170 Million Write-Down on Fire Phone After Disappointing Sales

Amazon Unveils Fire Phone
David Ryder/Getty Images said it would incur a charge of $170 million related to the Fire Phone for the third quarter, after the company’s smartphone flopped among consumers.

Amazon said it had about $83 million worth of Fire Phone inventory as of the end of Q3. The smartphone — aimed at competing with Apple’s iPhone, Samsung’s Android lineup and others — was generally panned by reviewers as limited and gimmicky.

The Fire Phone experienced poor sales even though Amazon chopped the price to a nominal 99 cents in September, with a two-year AT&T contract.

Amazon had been banking on whizzy new features of the Fire Phone, which it announced in June. Those included Dynamic Perspective, a system that uses four cameras to detect where the user is looking to render 3D-like perspectives and gesture controls, and Firefly, which can identify some 100 million items, including songs, movies, TV shows and products (sold by Amazon) using different sensors.

Over all, the e-commerce giant posted an operating loss of $544 million in the third quarter of 2014 — the biggest in Amazon’s history — on net sales of $20.58 billion, up 20% from the year-earlier period. Amazon reported a net loss of $437 million for the three months ended Sept. 30, compared with a net loss of $41 million in Q3 2013.

For the fourth quarter of 2014, Amazon said it expected sales to be between $27.3 billion and $30.3 billion (up between 7% and 18% compared with fourth-quarter 2013).

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  1. Craig Marker says:

    It’s merely an extension of their primary e-commerce site, but people don’t want a shopping device like this. Their apps on the iPhone and Samsung devices are plenty good. Anything more is in fact, just a gimmick. Don’t get me wrong, I think Amazon does a lot of things far better than any other company out there, but when it comes to devices like a mobile phone, that market is already full of far superior competition. My gut feeling is that Apple’s iPhone 6 Plus is the primary game changer here. It’s a premium phone with the larger screen that people want. Plus, it’s a status symbol that neither Samsung nor Amazon can even attempt to strike at.

  2. George Ebersole says:

    I don’t’ see the significance of this article unless it was tied into a stream or VOD venue. At least mention AT&T U-Verse or something.

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