Posted on 01/22/2002 3:47:56 AM PST by Arkle
Online retailing giant Amazon turned its first ever net profit in the last three months of 2001, exceeding its own targets and the most optimistic predictions of analysts. The retailer had been expected to announce only a so-called "pro forma" profit, an unreliable measure that excludes all but the most basic adjustments.
In fact, it made $5m net of all expenses during the quarter, compared with a loss of $545m a year earlier.
The news will cheer hi-tech investors, many of whom have long believed that Amazon had a workable model for making money out of e-commerce.
Over 2001 as a whole, however, Amazon continued to lose money, but it trimmed its full-year net losses to $567m, from $1.4bn the year before.
The fourth-quarter profit was helped by strong year-end sales, which were $1.1bn during the quarter, up from $972m in the same period of 2000.
In the vital run-up to Christmas, Amazon said that sales for the first weeks of December were up more than 20% year on year - at a time when most US retailers were struggling to match their 2000 performance.
Sales growth was particularly lively on the international stage: Amazon's overseas operations, centred on the UK and Germany, saw 81% year-on-year sales growth in the quarter.
Over 2001 as a whole, however, Amazon continued to lose money,…
Wouldn’t it be equal to a football team scoring more points in the fourth quarter than their opponent but losing the game yet celebrating a fourth quarter victory? Is that some sort of Enron accounting formula? I must have slept through that part of Econ. 101 ;-)
C'mon Ken, just a week ago you were telling us how AWFUL Amazon's numbers were gonna be in this report. And cash on hand is certainly NOT the key figure when they've gone profitable on both a pro forma AND net basis, because when you're profitable, your cash grows, not dwindles. When you're wrong, fess up. It's the right thing to do. :)
MM
Amazon Does the Reverse Kmart
Maybe there's something to be said for low expectations. Amazon reports that sales growth for the entire company and for the book/music/video segment exceeded expectations for the fourth quarter, and that the company had delivered on its promise to post pro forma operating income in the period.
Analysts were delighted with the results, using terms such as "spectacular," awesome" and "knocking the cover off the ball" to describe the quarter. Of course, when it comes to Amazon, analysts have been delighted before. Still, the reaction was perhaps the strongest indication to-date that the company will not only survive but remain a bookselling force for the indefinite future.
Revenues in the group increased 5.3% in the quarter to $538 million, while total company sales rose 14.7% to $1.12 billion. Pro forma operating profit was $59 million in the quarter compared to a loss of $60 million in last year's fourth quarter. The company had net income of $5 million in the quarter compared to a loss of $545 million in the last quarter of 2000. In the b/m/v group, pro forma operating income rose 63.4% to $63.9 million.
Amazon chairman Jeff Bezos and chief financial officer Warren Jenson both attributed the improved results to productivity gains and lower pricing, which combined to help boost unit sales by 23% in the quarter (about 12% for b/m/v). Lower prices, "outstanding" sell through of used items (which accounted for 15% of unit sales), the success of assuming responsibility for Borders.com and, most importantly, lower prices all contributed to the revenue gain in the quarter, Jenson said. "We've lowered book prices to what would be ridiculous levels in the physical world," Jenson told analysts.
To help boost sales across the company, Amazon has introduced a new shipping policy. Under the program, the company will not charge for shipping on orders of at least $99. Bezos maintains that with Amazon's discount policy - books priced at more than $20 receive a 30% discount -combined with the new shipping offer, the e-retailer's book prices "are really, really low. If you're not buying books from Amazon you're wasting money," he said.—Jim Milliot
As an internet business, I like the Netflix model. Thats really coming up with an idea consumers should value.
Do Ebay's actual earnings justify the stock price?
So, it's four years almost to the day later, and Amazon.Com is finally making some money.
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