's bright future

Doug Henwood dhenwood at
Wed Apr 26 14:50:33 PDT 2000

Dow Jones Newswire/Wall Street Journal Interactive - April 26, 2000 Reports a Huge Loss As Revenue Surged in First Quarter

An INTERACTIVE JOURNAL News Roundup Inc., the online-retailing giant that has yet to report a profitable quarter as a public company, late Wednesday served up what Wall Street has come to expect: huge losses and admirable revenue growth in the first quarter.

Reporting after the close of regular stock-market trading, the Seattle-based company posted a net loss of $308.4 million, or 90 cents a share, compared with a loss of $61.7 million, or 20 cents a share, a year earlier.

The latest quarter included $186.9 million for amortization of intangibles, merger expenses and other charges. Excluding those items, Amazon said its pro forma loss was $121.5 million, or 35 cents a share, compared with $36.3 million, or 12 cents a share, in the year-earlier quarter, excluding charges.

Analysts surveyed by First Call/Thomson Financial were expecting the company to report a loss, excluding acquisition-related expenses, of 36 cents a share on revenue of $521.4 million. The whisper, or unofficial, number floating on Wall Street, was for a loss of 34 cents a share, according to

The company's first-quarter sales were $573.9 million, up 95% from $293.6 million a year earlier.

Despite the continued large losses,'s outlook was generally upbeat. It predicted it will be profitable on an operating basis in the next three months, and it projected pro forma profits in its books, music and video segment. The company also said its repeat customer rate in the first quarter was 76%, up from 66% a year earlier.

"Our platform has allowed us to expand the products and services we offer customers and demonstrate operating leverage in our results at the same time," said Jeff Bezos, founder and chief executive officer. "We expect that the rest of the year will yield a similar balance of global growth and expansion while driving toward profitability in every business."

The results come at a critical time for Amazon. The online-retailing business is in the midst of a fundamental shakeout that has eliminated some former highfliers. That trend is expected to continue, and the stock prices of most online retailers, including Amazon, are down substantially from their peaks of a few months ago. At 4 p.m. Wednesday on the Nasdaq StockMarket, Amazon shares were up $1.0625 at $53.50. That's less than half the company's 52-week high of $112.325 on Dec. 9, 1999.

But despite Amazon's lack of profits, virtually no one predicts its demise. Indeed, many prominent observers have become less critical of Amazon, which they say may be well positioned.

Amazon is well funded with more $3 billion in debt financing at its disposal. It also has the best-known online-shopping brand name, solid systems, proven technology and a giant customer base.

Tom Wyman, an analyst at J.P. Morgan Securities Inc. believes the first quarter "was a strong one for leading e-tailers." Healthy consumer spending helped well-known e-commerce companies Inc. and eBay Inc. post better-than-expected results in recent days.

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