Amazon Beats Estimates

Seattle-based e-commerce bellwether 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

“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

“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,, which
follows the successful site that has been up
for nine months.

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

The original deal came at a time when 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

The new 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.

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