For Amazon, It’s Time to Execute

Amazon.com shares were sinking today as the impact of its slowing revenue growth became apparent to investors. But elsewhere, there was positive news on the earnings front from other e-commerce companies such as 1-800-Flowers.com and Ticketmaster.

Goldman Sachs analysts told clients that despite slower top-line growth as consumer spending weakens, Amazon “remains positioned to achieve fourth quarter profitability with revenues as low as $970 million.

The stock was down $1.93 or more than 20 percent in mid-day trading to $7.65, after pushing upwards yesterday before the company’s third-quarter earnings report came out.

Amazon posted net sales of $639 million compared to net sales of $638 million in the third quarter of 2000. Revenues were down slightly from the $650 million consensus estimate from analysts.

“Continued execution to reach break-even remains critical for Amazon and visibility on
achieving this goal will be the main driver of stock price performance,” GS said.

Amazon agrees; its Chief Financial Officer Warren Jenson said in a conference call yesterday that “reaching fourth quarter profitability requires no heroics, just execution.”

Goldman Sachs, meanwhile, reduced its fourth quarter revenue estimate for Amazon to $1.010 billion from $1.060 billion and maintained its fourth quarter EPS estimate of a fully diluted loss of 7 cents.

Amazon’s shares “will likely be range-bound until investors can get a better read on the achievement of fourth quarter positive EBIT,” GS said. “Growth continues to slow in a declining consumer spending environment and the company has limited flexibility to induce demand given the priority of reducing costs to achieve profitability.”

Elsewhere on the e-commerce front, Westbury, N.Y.-based 1-800-Flowers.com
reported record revenues of $79.2 million for the first quarter of fiscal 2002 and cut its loss.

The company reported a loss of $8.95 million, or 14 cents a share, compared with a loss of $22.5 million, or 35 cents a share a year ago. Analysts on average had been expecting a loss of 16 cents a share.

The company’s fiscal first quarter, which includes the summer months with no major gift-related holidays, is its lowest revenue quarter.

Looking forward, 1-800-Flowers.com also said that it anticipates achieving total revenue growth during the current fiscal second quarter (ending Dec. 30) of approximately 25 to 28 percent to a range of approximately $168-$172 million. The company anticipates being both EBITDA and EPS positive for the fiscal second quarter with EBITDA in a range of approximately $4.5-to-$5 million and net income of $1.3 million to $1.9 million, or 2 to 3 cents per share.

Meanwhile, Los Angeles-based Ticketmaster posted third quarter revenues up 7.1 percent to $157.5 million. Pro forma per share earnings were 4 cents, compared with a loss of 3 cents per share in the year-ago quarter.

On a fully diluted basis, Ticketmaster reported a third-quarter net loss of $49.4 million or 35 cents a share, compared with a loss of $51.2 million or 36 cents per share a year ago.

Earlier this month, Ticketmaster warned of a third-quarter revenue shortfall due to event cancellations and postponements in the wake of the deadly Sept. 11 attacks, but said it was encouraged by a rebound in the last week of the quarter.