RealTime IT News

Amazon Nearly Tops Itself

Citing strong sales in electronics and in its overseas efforts, Amazon.com Inc. nearly beat its own forecast of several weeks ago, posting first quarter net sales of $700.4 million, up 22 percent.

Pro forma operating loss was $49 million or 21 cents per share, compared with a pro forma operating loss of $99 million or 35 cents a share in the same period a year earlier. Amazon execs reiterated earlier guidance that it expects to achieve pro forma operating profitability by the end of the fourth quarter.

Sales for the quarter compared to sales of $574 million in the first quarter of 2000. Electronics was the company's second-biggest U.S. sales venue for the first quarter, while net sales from Amazon.com's four international sites rose to $132 million, an increase of 76 percent from the first quarter of 2000.

Excluding $114 million, which represents the first quarter's portion of previously announced restructuring and other charges, and excluding a net gain of $23 million for certain other items, the more fully diluted net loss for the quarter would have been $143 million, or 40 cents per share.

"This was another quarter of significant progress for Amazon.com -- we are on track to reach our objective of pro forma operating profitability in the coming December quarter," said Warren Jenson, Amazon.com's chief financial officer.

"Cumulative customer accounts grew to over 32 million (during the first quarter), which includes 6 million international customers," said Jeff Bezos, founder and CEO of Amazon.com. "Again this quarter our customers responded with particularly strong purchase levels in our electronics, tools and kitchen stores and from our international sites."

Amazon said on April 9 that excluding goodwill, stock-based compensation expenses and other costs, the company would report revenues of more than $695 million and a loss of 22 cents a share or less. Wall Street analysts had been forecasting a loss of 25 cents.

Amazon said it ended the first quarter with $643 million in cash and marketable securities.

The company took restructuring and other charges of $114 million during the first quarter of 2001 related to the 1,300 jobs that Amazon cut made earlier this year and the closing of a warehouse, and Amazon said it expects to take additional restructuring and other charges of over $50 million during the second quarter of the year.

Jenson said in a conference call that for the second quarter, net sales are expected to be between $650 million and $700 million and that pro forma operating losses are expected to be flat to slightly improved from the first quarter. For the year, net sales are expected to increase between 20 and 30 percent over 2000.

Jenson reiterated earlier guidance that pro forma operating profitability is expected to be achieved in the fourth quarter.

Before the release came out after Tuesday's closing bell on Wall Street, Goldman, Sachs issued an advisory to clients saying that "results should get better from here with continuing improvements in margins via productivity savings and operating leverage while meeting top-line estimates." GS reiterated its market outperform rating.

Amazon's gross margin expansion and operating income that was achieved two quarters ahead of expectations "increase the probability of Amazon reaching profitability in the fourth quarter of 2001 despite our estimate for 2001 top-line growth of just 25 percent," GS said.

The advisory said that several execution hurdles remain, particularly fulfillment. "However, in our view, there are significantly fewer 'ifs' than in the past," GS said, noting that the demise of eToys alone presents Amazon with a $1 billion opportunity.

On Monday Amazon stock got a boost when a Deutsche Banc Alex. Brown analyst said he expects today's earnings report from the Internet retailer to show that "fundamentals remain intact" and that there's "light at the end of the tunnel."

Amazon closed Tuesday at $15.68, down, 52 cents, in advance of the full earnings release. However the stock has been climbing since the April 9 announcement, when it soared almost $3 in one day. Its 52-week low is $8.10.