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Amazon Beats Estimates

Seattle-based e-commerce bellwether Amazon.com Inc. exceeded its pro forma operating profit goal for the first quarter, lowered some book prices and raised its financial guidance.

The e-tailer said net sales for the quarter were $847 million, compared with $700 million in the first quarter of 2001, an increase of 21 percent.

Fully diluted, the net loss for the first quarter was $23 million, or 6 cents per share, compared with a first quarter 2001 net loss of $234 million or 66 cents per share.

Wall Street analysts on average had been expecting a first-quarter GAAP loss of 9 cents a share.

International segment sales, from the company's U.K., Germany, France and Japan sites grew 71 percent for the first quarter to $226 million

Amazon said that second-quarter net sales are expected to be between $765 million and $815 million, up 15 to 22 percent year-over- year. Pro forma operating income is expected to be between $5 million and $15 million.

"We are ahead of schedule financially," said Warren Jenson, chief financial officer. "Our continued operational progress and momentum allow us to further lower prices for customers and at the same time increase our 2002 guidance.''

Amazon said customers can now save 30 percent on books over $15, unless marked otherwise. Last July Amazon lowered book prices to 30 percent off books over $20, then six months later introduced free shipping on orders over $99.

"The price cuts are a big deal and can be expensive in the short term, but the long-term rewards ... are enormous," CEO Jeff Bezos said in a conference call. "We will continue to be relentless and methodical about lowering prices for customers ... and we expect to do even more in the future," he said.

Going forward, the company said that for all of 2002, net sales are expected to grow by over 15 percent and pro forma operating income is expected to be over $100 million.

Amazon stock closed Tuesday at $14.06, down 25 cents, but rose to $14.95 in trading after the bell.

Meanwhile, Borders Group Inc., which signed an online alliance with Amazon a year ago, now will provide Amazon users with the option of picking up books, music CDs and DVDs at Borders' bricks- and-mortar stores nationwide.

The deal puts another arrow in Amazon's quiver, and the timing was certainly nice, coming just hours before the company reported its earnings.

This second agreement between the companies also will allow for the creation of a new co-branded Web site, Waldenbooks-teamed-with-Amazon.com, which follows the successful Borders-teamed-with-Amazon.com site that has been up for nine months.

The multi-year agreement has terms similar to the Borders-teamed-with Amazon.com alliance, with all sales originating through the new Waldenbooks-Amazon site recorded by Amazon.com with an unspecified percentage of sales going to the Ann Arbor, Mich.-based Borders Group. Inventory, fulfillment and customer service will be provided by Amazon.com.

The original deal came at a time when Borders.com was faltering in its efforts to sell books online.

Borders and Seattle-based Amazon said that for this year's holiday season customers would be able to order online and pick up their purchases at one of more than 365 Borders stores throughout the United States.

The new Waldenbooks.com at Amazon will be designed to appeal to the more than three million members of Waldenbooks' Preferred Reader loyalty program who will be able to earn points with every purchase made through the co-branded site, Borders said.