In a sign of the times for e-commerce ventures that are struggling to become profitable, Amazon.com last week disclosed a restructuring in financial agreements with some other online retailers in which it has invested. The move comes after the companies asked for changes such as reductions in the cash payments they make to Amazon.
In a filing submitted to the US Securities and Exchange Commission, Amazon said it has adjusted the amortisation of previously unearned revenue to reflect the changes - leading to a $US2.9 million reduction in the amount of revenue that it recognised from the investment deals in the second quarter.
Amazon didn't identify the companies that asked to have their investment deals restructured. But it said the changes involve online retailers that have signed up to participate in the Amazon Commerce Network (ACN), a program under which it invests in other e-commerce companies. ACN members include Drugstore.com, HomeGrocer.com and Pets.com, according to a list posted on Amazon's Web site.
According to the Form 10-Q filing to the SEC detailing its second-quarter results, Amazon received a total of $US24.3 million in revenue from its ACN partners in the three-month period that ended in June. From an investment perspective, though, Amazon said it recorded $US109.9 million in equity-method losses related to the ACN program during the second quarter.
Amazon last week reported a net loss of $US89 million for the second quarter, an announcement that came days after Joseph Galli (president and COO ), said he was leaving after just 13 months at the company.