Associated Press
SEATTLE — Amazon.com, the pioneering Internet retailer that has symbolized for many the potential and pitfalls of dot-com commerce, surprised Wall Street and the rest of the world Tuesday by making money.
For the quarter ended Dec. 31, the world’s largest Internet retailer said it earned $5 million, or 1 cent a share, compared with a net loss of $545 million, or $1.53 a share, in the year-ago period.
Sales rose 15 percent to $1.12 billion from $972 million in the fourth quarter of 2000, showing the company had healthy sales in the all-important holiday quarter despite what was for many retailers a lackluster season.
The results, helped by lowered prices and companywide penny-pinching, sent shares in Amazon up $2.44, or 24 percent, to close at $12.60, on the Nasdaq Stock Market.
"I am impressed. There’s no question about that," said hedge fund manager Scott Reamer of Union Tree Capital Research in Denver.
Amazon, once a darling of Wall Street and now one of the last survivors of the dot-com fallout, has in the past year endured a barrage of criticism for burning through cash under the motto "get big fast." Since 1997, the year it went public, the company has lost a total of $2.9 billion on sales of about $8.3 billion.
"I’ve always known that our business model worked," Jeff Bezos, the company founder who was named Time’s Person of the Year amid the dot-com boom of 1999, told reporters Tuesday.
Analysts said Tuesday’s results did prove that size matters in e-commerce.
"E-commerce isn’t an easy matter," said Jeetil Patel, an analyst with Deutsche Banc Alex. Brown. "It took the company $1.2 billion in revenue to achieve a profit, so scale is definitely a critical success factor. Not a lot of smaller companies will be able to pull this off."
But Bezos also lauded his employees for cutting costs significantly over the past year, as the company abandoned quick growth in favor of turning a profit for disgruntled investors. Operating expenses were down 24 percent in the fourth quarter, compared with a year earlier, Amazon chief financial officer Warren Jenson said.
Bezos said costs were cut in a number of ways, ranging from reducing marketing expenditures to simply asking employees to tighten belts wherever possible.
"We were just very, very focused on it," Bezos said. "There was no single silver bullet that led to that."
Jenson said the Seattle-based company’s fourth quarter results also were helped by lowered book prices — which prompted strong sales for bargain-hungry shoppers in the holiday quarter.
The company also recorded a pro forma net profit, which excludes certain costs such as losses from investments, of $35 million, or 9 cents a share, compared with a pro forma net loss of $90 million, or 25 cents a share, in the year-ago period. Analysts polled by Thomson Financial/First Call expected a pro forma net loss of 7 cents a share for the latest period.
A year ago, Amazon executives said the company would aim to turn a pro forma operating profit, which excludes many expenses, by the end of 2001. The company did that and more, turning an operating profit of $59 million for the quarter, compared with a pro forma operating loss of $60 million a year earlier.
Despite the strong results in the fourth quarter, Amazon said it still expects pro forma operating results ranging between break-even to a loss of $16 million in the first quarter ending March 31, on forecast net sales of between $775 million and $825 million. The company did not offer guidance on net income estimates.
Jenson said Amazon.com has been affected by the stagnant economy "like everyone else," but hopes to continue to lure shoppers by cutting prices and offering such deals as the new Super Saver Shipping option, which gives customers free shipping on some orders of $99 or more.
"We are incredibly happy with these fourth-quarter results, (but) we’ve really got a lot of work to do going forward," Bezos said. "We’ve got to keep our heads down and focus."
Patel said the outlook proves that e-commerce is still quite seasonal.
"This is a step in the right direction," Patel said, adding that Amazon now has to work on keeping profits steady throughout the year.
For the fiscal year ended Dec. 31, the company recorded a net loss of $567.2 million, or $1.56 a share, compared with a net loss of $1.41 billion, or $4.02 a share, in 2000.
Net sales were $3.12 billion compared with $2.76 billion in fiscal 2000.
Jenson said the company ended the quarter with about $1 billion in cash, slightly higher than the $900 million the company had originally projected.
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