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

Amazon.com 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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