Living Social Causes Amazon to Post Loss in the Third Quarter

Retail titan Amazon isn’t used to anything less than excellence recently. Since its relatively humble beginnings as an online bookstore in the late 1990s, Amazon has since expanded its business model and its offerings to include everything from server usage and cloud data storage, to online streaming media and the ability to even purchase certain food goods. Amazon has truly branched out, so to speak, and its recent trajectory show it to be something of an unstoppable force in the technology industry. Its recent development of the Kindle line of ereaders, which eventually became some of the most affordable tablet computers, has put Amazon at the forefront of the tech race, alongside Apple and Google in terms of successful innovation and product development. What’s interesting, then, is the recent news that Amazon has posted its first lost in years, having ended the third quarter slightly less well-off than it did at the same time last year, or even compared to the quarter that came before it. There are a lot of speculations as to why this may have happened, but the two most probably theories might leave technology enthusiasts somewhat surprised.

Ever since its investment in LivingSocial back in late 2010, Amazon has had something of a heavy stake in the company’s success. The investment made was a sizeable one, and it was followed up with another one that came the very next year. Amazon seemed really intent in putting a lot of money behind LivingSocial, and now these decisions have been called into question, as the Internet leviathan has posted its first quarter of losses in many years. Those familiar with LivingSocial’s recent performance know that the online coupon company hasn’t been doing well at all – nor has its main (and pretty much only) rival Groupon. Apparently, however, LivingSocial is doing poorly enough to cause Amazon to experience a net loss of $274 million in the third quarter. This is a pretty big deal.

LivingSocial itself obviously isn’t doing much better. The struggling startup lost about $566 million bucks during this recent third quarter, and this is apparently something straight from the desk of Tim O’Shaughnessy, the company’s CEO.

Amazon prefers to tell something of a different story, however, and insists that LivingSocial’s recent lame performance isn’t the only thing weighing down recent financial performance. They’re sticking to the story that their heavy investment in the Kindle is also resulting in some losses, and are saying that their commitment to offering a high-quality product at an affordable price that’s near cost has resulted in their less-than-stellar performance during the third quarter. Whether online¬†coupon codes¬†or the best-selling Kindle HD that’s hurting Amazon, it’s still interesting to note that this last quarter’s performance has been less than fantastic. There are a number of explanations as to why the company is performing the way it’s been, but the Kindle Fire continues to sell enough to give the iPad and Google’s Nexus 7 a serious run for their money.