Apple and Amazon both saw their stock prices decline Thursday after less-than-stellar earnings reports that were lower than predicted.  Amazon reported higher sales during its third quarter, but also an overall loss as a result of its LivingSocial investments, as well spending on its Kindle division and expansion of distribution centers.

Apple’s fourth-quarter earnings showed a 24 percent increase in profits, but this was lower than expected and accompanied by a report of slow iPad sales, a development that continued a streak of disappointments for investors.

Apple’s Challenges

The most recent quarter ending in September from the Cupertino-based company wasn’t a weak one, as revenues rose 27 percent, and sales from the recently released iPhone 5 were stronger than expected.  This wasn’t enough for investors expecting even better growth, however.

From The Los Angeles Times:

It was a mixed quarter for Apple. For the three months ended Sept. 29, the world's most valuable company reported fiscal fourth-quarter revenue of $36 billion, up 27.2% over the same quarter last year. Profit totaled $8.2 billion, or $8.67 a share, up 24.2% from $6.6 billion, or $7.05, in the year-earlier period.

Analysts had forecast earnings per share of $8.75 on revenue of $35.8 billion.

Industry experts say that missing such expectations is uncharacteristic of Apple, which has set many investors on edge.

Apple also issued earnings guidance for the quarter ending in December at $52 billion, which fell $3 billion short of expectations.

Investors will be watching the holiday quarter closely, however, especially in light of Tuesday’s announcement of the iPad Mini, and new versions of the iMac, Macbook, and full-size iPad.  Apple’s chief executive, Tim Cook, in fact explained to investors that slow sales of the iPad were due to consumers waiting for the announcement of the rumored iPad Mini.  

This may pay off for Apple, as initial preorders for the iPad Mini reportedly sold out in only 20 minutes.

On the other hand, Cook also acknowledged that the large number of new products in its future lineup is unusual for Apple, saying to investors, “This is the most prolific period in our history in terms of new product introduction and innovation.”

The company’s iPad 4 announcement also caused some backlash with customers who complained the device was too small an improvement and came six months too early in Apple’s normal yearly update cycle for its devices.  Whether this faster release cycle is permanent remains uncertain.

Amazon’s Losses

Amazon reported some significant losses despite higher sales figures for its last quarter as the company made big expenditures in a number of different divisions.

From The Boston Globe:

The world’s largest online retailer posted a loss of $274 million, or 60 cents per share, in the July-September period. That’s down from earnings of $63 million, or 14 cents per share, a year earlier.

The latest quarter’s results include a loss of 37 cents per share related to Amazon’s minority stake in LivingSocial. Without this charge, it still would have lost 23 cents per share, worse than what analysts were expecting.

Revenue grew 27 percent to $13.81 billion, from $10.88 billion, falling short of analysts’ expectations.

Analysts surveyed by FactSet, on average, were expecting a loss of 7 cents per share on revenue of $13.91 billion.

Chief Financial Officer Tom Szkutak also attributed losses to the costs of the company’s Kindle e-reader and tablet products, which saw the release of the $199 Kindle Fire HD in September.

Amazon did not dwell on the Kindle losses, however, emphasizing that the Kindle Fire HD is the company’s best selling product, though there were no specific figures offered. CEO Jeff Bezos also said in the report, “Our approach is to work hard to charge less. Sell devices near break even and you can pack a lot of sophisticated hardware into a very low price point.”

Another source of losses for Amazon was its spending on 19 new distribution centers worldwide for fulfilling orders, which included plans to hire around 50,000 temporary workers for the holiday season.

Despite the losses, Amazon’s investments may pay off as well, as a larger version of the Kindle Fire HD is poised to compete with Apple’s iPad Mini next month.  Also, the promise of same-day delivery from the world’s largest online retailer as a result of its expanded shipping centers could place Amazon in an especially strong position for the holiday shopping rush.

For the current quarter including the holidays, Amazon forecast revenue between $20.25 billion and $22.75 billion, with profits of $490 million to $310 million.

You can reach Staff Reporter Shea Huffman here or follow him on Twitter.