Amazon Reports Small Loss as It Focuses on Investments

But with revenue up 22 percent, Amazon showed that it could still deliver the sales growth demanded by investors, who have lifted the company’s stock 21 percent this year. So far, those demands do not include an insistence on big profits.

Until it does, Amazon seems content to pour money into initiatives aimed at gobbling up an increasing share of spending by consumers.

For the quarter that ended June 30, Amazon said it had a net loss of $7 million, or 2 cents a share, compared with net income of $7 million, or a penny a share, in the same period a year earlier. Amazon’s revenue was $15.7 billion, up from $12.83 billion the year before.

The results were slightly below the estimates of analysts surveyed by Thomson Reuters, who expected Amazon to report earnings of 5 cents a share and revenue of $15.73 billion.

The miss did not seem to trouble investors too much. The company’s stock dropped less than 2 percent in after-hours trading after the release of its earnings report.

A good illustration of Amazon’s long-term bets is online video. The company is spending hundreds of millions of dollars on licensing rights to build a large library of video that its customers can watch through their Kindle tablets and other devices. These agreements are critical as movies, music and other media — which account for 28 percent of Amazon’s total sales — shift from physical to digital form.

The company recently cut its biggest such deal ever, with a multiyear agreement to license television shows from Viacom, including children’s shows like “Dora the Explorer” and “SpongeBob SquarePants.”

As a result, Amazon spent almost 47 percent more on technology and content in the quarter, for a total of $1.59 billion — roughly 10 percent of its total revenue. Included in that spending is the company’s investment in Amazon Web Services, a lucrative business through which Amazon rents capacity in its data centers to independent companies.

“We’re investing for the large opportunities we have in front of us,” Tom Szkutak, the company’s chief financial officer, said in a conference call.

While Amazon is feared as a seller of physical goods, it faces several formidable rivals in the digital content business, including Netflix, Apple, Hulu, Microsoft and Google.

Still, Amazon is also spending aggressively on the warehouses it needs to deliver physical goods, building them in locations that have been inching ever closer to big cities with the goal of offering next-day, or even same-day, deliveries to shoppers. This year, Amazon began selling groceries in the Los Angeles area, using its own trucks to shuttle fruit, meat and boxes of cereal from a new warehouse in the city to customers’ doorsteps.

The effort is expensive and risky, though Amazon would not say whether or how much money it was losing on it. The grocery business has killed Internet retailers before — Webvan was the most notable casualty — so Amazon chose not to expand the service beyond a test in Seattle until recently.

“The challenge we’ve had over the past several years is how to make it economically viable,” Mr. Szkutak said.

All the spending on warehouses and other projects has led to a surge in hiring at the company. Its head count swelled to 97,000, up more than 40 percent from 69,000 a year ago. The hiring earned the company a plum position as the backdrop for a speech on middle-class jobs that President Obama is expected to deliver on Tuesday at an Amazon warehouse in Chattanooga, Tenn.

A big part of Amazon’s allure for investors remains its pre-eminent position in e-commerce, which is expected to rise 14.8 percent to $248 billion in American sales this year, according to eMarketer. That is far better growth than the single-digit growth expected for retail sales over all in the United States this year.

Kerry Rice, an analyst at Needham & Company, said investors believed that Amazon could keep stealing market share from Walmart and other physical retailers, and that eventually its profits would improve.

“On some level, I think some people are buying the stock because they’re hoping for that investment cycle to begin to reduce,” Mr. Rice said. “If they pull back on spending, you’re going to see that operating margin tick up.”

Mr. Rice added: “I don’t think that’s going to happen for a long time.” 

Asiana Flight 214 Investigation Focuses on Airspeed in Final Seconds

Central to the question of just what happened in the cockpit of Asiana Flight 214 in the moments before it slammed into a sea wall at San Francisco International Airport is why the crew allowed the airspeed to fall so far below the targeted airspeed needed to bring the Boeing 777 in safely.

National Transportation Safety Board Chairman Deborah Hersman told reporters in her final briefing Thursday that a preliminary review of flight data indicates “no anomalous behavior” of the autopilot, auto-throttle system or flight director — three systems regularly used by pilots during various phases of a flight, including landing.

Saturday’s crash killed three people and injured dozens more. But even as crews finish clearing the wreckage from Runway 28L, the charred and broken airplane serves as a reminder of the remarkable engineering of modern airliners and safety advancements that allowed so many people to survive an impact that sheared the plane’s tail, snapped off an engine and scattered debris across a wide swath of runway.

Flight 214 came in under clear skies, with low wind and excellent visibility. Because of clear weather, and an instrument landing system that was offline at the time, the pilots were cleared to make a visual approach. Hersman says interviews with the pilots indicate they believed the auto-throttle system was engaged during final approach, meaning it would automatically control engine thrust, maintaining the reference airspeed requested by the pilots. The reference airspeed is based on the weight and configuration of the airplane, and provides a safe airspeed for the pilots to fly during the approach.

The pilots disconnected the autopilot 82 seconds before hitting the sea wall, at 1,600 feet. This is normal during a visual approach, when pilots “hand fly” the airplane. On modern airliners, however, it is possible for the pilots to leave the thrust control — controlled by a pair of levers between the pilots in the 777 — in an automated mode. Though retired captain and veteran airline instructor Gene Fish says pilots are often taught to disconnect the auto-throttle system when hand flying because it could end up “chasing” the control inputs made by the pilot. With more than 39,000 hours, Fish has been flying since 1954 and has flown the 727, 737, 747, 757, 767 and 777. He says as a pilot makes adjustments to the descent profile, the auto-throttles make the appropriate changes, but because they are acting based on the control inputs of the pilot, a new change from the pilot could happen just as the auto-throttles are providing the thrust from the previous input.

“When the autopilot works with the auto throttle, it’s making minute changes, maybe a tenth of degree of a pitch change,” Fish says of the close coupling between autopilot and the auto-throttle system. “With hand flying the airplane, we’re making two, three, four, maybe five degree pitch changes.”

He says most pilots find it easier to keep the proper thrust setting and pitch attitude when hand flying an approach, by using their hand to control the thrust levers (the larger set of levers on the right in the center console picture below) since the pilot can anticipate their own needs as they adjust their descent.

If a pilot does want to use the auto-throttle system, they must first “arm” the system so it can be used, something Fish says this done at the beginning of a flight and usually left on. On the glare shield above the instrument panel in front of the pilot are a pair of switches used to arm the system for the right and left engines. Immediately to the right of the switches is a digital display showing the selected airspeed chosen by the pilot. It is the left most display on the glare shield, displaying 142 knots in the photo above. A dial beneath it allows a pilot to select the desired airspeed.

In order for the autopilot or the auto-throttle system to fly at the assigned airspeed, the pilot must engage the system(s) with the push of a button. If the autopilot and auto-throttle system is engaged, it can use the speed selected by the pilot if in speed mode, and can also fly the airplane on a selected heading, or to a selected waypoint while holding or adjusting altitude. The autopilot system in a 777 also can land the aircraft on runways equipped with the necessary approach.

We recently visited a Boeing 777 simulator and were able to make two landing approaches. On the first, the auto-land system was used in which the autopilot guided the airplane to touchdown on the center line of the runway. On the second, we hand-flew the airplane, with the auto-throttle system engaged. We could see and feel even small changes in the levers as they moved about while the system adjusted the thrust needed to maintain the requested airspeed of 136 knots.

Hersman said the agency will look carefully at what the flight crew was doing and what it’s thinking was during the final minute of the flight, and closely examine its use of the auto-throttle system.

“There are expectations that the crew is monitoring speed as they’re on approach,” she told reporters.

During a normal approach, one of the two pilots in an airliner typically keeps an eye on airspeed during descent to ensure the airplane is flying at a safe speed. One question raised by many pilots is why the Asiana 214 crew did not notice the decaying airspeed until seconds before impact, by which time the plane already was some 30 knots (~35 mph) below the target speed of 137 knots (~157 mph). Hersman said there is no mention of airspeed on the cockpit voice recorder as the plane descended through 500 feet at 134 knots, until after a callout was made at 100 feet — by which time the airspeed was less than 112 knots. Falling just a few knots below the target speed usually is sufficient to prompt a response from a pilot. It wasn’t until after the 100 foot announcement — roughly nine seconds before impact — that there were two calls in the cockpit for a go-around.

Another question raised by pilots is what, if any, role might have been played by the difference in auto-throttle system designs between Boeing and Airbus aircraft. In a Boeing airliner, the levers move when the system is engaged, providing tactile feedback. In the Airbus system, the levers are placed in different positions for different phases of the flight, but do not move as the system adjusts the thrust. The two systems also differ in how much absolute control the fly-by-wire systems allow the pilots to have during flight.

The pilot at the controls during the crash was in the final stage of his transition training in the Boeing 777. He had spent the past several years flying an Airbus A320 and had nearly 10,000 hours’ experience. The instructor pilot in the right seat was a veteran 777 captain with more than 12,000 hours of flying experience.

Despite the eerie scene of wreckage scattered across the runway, Hersman said several things about the debris field highlight the safety of a modern airliner. One common photo of the scene shows the main landing gear, which hit the seawall and broke off. Although that may look alarming to the lay person, Hersman says preliminary findings indicate the landing gear did exactly what it is supposed to.

“Landing gear is designed to be frangible, so that it can separate from the aircraft,” she noted. “It performed as deigned.”

The landing gear is designed to snap so there is less chance it might puncture the fuel tanks, located in the wings just above the gear, possibly creating a fire. Hersman said Asiana 214's tanks were “not breached” and the fire was started by engine oil that ignited, slowly spreading flames to other parts of the airplane.

Beyond determining what caused the crash, federal investigators and a team from Boeing and others in the airline industry will carefully analyze the airplane. What they learn of the crash, and how the airplane performed during and after it, could lead to improvements in future aircraft or retrofits to existing airplanes.

With the on-sight investigation nearing completion, Hersman said “this is just the tip of the iceberg,” with regards to the work that needs to be done. Investigators will continue to analyze the flight data and voice recorders, along with the pilot interviews and aircraft wreckage to try and understand what might have led to the pilots not maintaining the necessary airspeed before the crash. Hersman says it typically takes 12 to 18 months to produce a final report.

Ex-Business Objects CEO's startup focuses on workforce analytics

After leaving his post as CEO of SAP’s Business Objects division about three years ago, John Schwarz had a revelation.

Before him, Schwarz said in a recent interview, was an opportunity to “redo BI from a clean sheet of paper.” That thought led to the formation of Visier, an analytics software provider where Schwarz serves as CEO.

While Schwarz was at Business Objects, customer satisfaction surveys found that the vendor’s BI software was well-liked among IT users, “but you talk to the actual business users and the results were far less satisfactory,” he said. “IT could get the tools up and running, but then they flipped it over to the end user and they said, ‘it’s too difficult.’”

Visier’s approach from the beginning was to “throw the whole BI technology idea out and start at the other end of the spectrum,” Schwarz said. “Start with the user and go back to the data. As long as you can start up a browser, you can use our application.”

Beyond creating an attractive user interface for Visier’s cloud-based software, Schwarz and his team sought to boost user productivity by initially focusing on a single domain: workforce analytics.

With the launch this month of version 10 of Visier’s software, the platform will contain some 300 prebuilt visualizations and analysis tools that cover “the top metrics and questions people have in the [human resources] world,” he said.

For example, the Visier system can help human resources staffers analyze which current employees may be at most risk of leaving the company, based on historical data regarding the attributes of workers who previously left.

It’s also possible to share the results of analyses with others by exporting information to slideshows.

Visier also promises customers a much speedier and happier experience on the implementation side. New customers can be up and running within four weeks, compared to more than a year for traditional on-premises BI projects, according to Schwarz.

The cost of Visier’s software is also “an order of magnitude” lower than a traditional BI project, he said.

Later this year, Visier will release a new application for workforce planning, which will allow users to model, predict and assess future staffing scenarios. The company is also planning to create analytic applications for additional domains, such as sales, marketing and finance, Schwarz said.

In addition, Visier will seek out third parties to build on top of its platform, which uses MapReduce along with a range of homegrown technologies under the hood, along with HTML5 and Flash on the front end, according to Schwarz.

Visier has about two dozen customers, most of them larger companies such as ConAgra. While Visier is capable of running globally, the company won’t have data center operations outside of North America until later this year, Schwarz said.

It competes with fellow workforce analytics specialist OrcaEyes, as well as products from BI platform providers such as SAP, Oracle and IBM.

While “it would be a bit of a stretch” to say customers can’t get capabilities like Visier’s anywhere else, the company has a “very strong product,” said analyst Stephan Millard, vice president and research director at Ventana Research. “What they’ve done is prepackaged everything people want in human capital analytics.”

One potential risk to customers is the possibility Visier will be acquired at some point by a larger vendor.

In general, the HCM (human capital management) software market “has been consolidating for a while,” and it stands to reason Visier will get looked at by SAP, Oracle, Workday, he said.