By Allison Linn
Associated Press
SEATTLE – Amazon, the pioneering Internet retailer that has symbolized the potential and the pitfalls of dot-com commerce, posted its first net profit ever in the fourth quarter, beating its own forecasts and Wall Street’s expectations.
For the quarter ended Dec. 31, the 6-year-old company said Tuesday it earned $5 million, or 1 cent a share, compared with a net loss of $545 million, or $1.53 per share, in the year-ago period.
“We nailed this quarter from a financial perspective,” chief financial officer Warren Jenson said in a conference call with reporters.
Shares in Amazon, the world’s largest Internet retailer, soared $2.16, or 21 percent, to $12.32 in early trading Tuesday on the Nasdaq stock market.
The results were on net sales of $1.12 billion, a 15 percent increase over sales of $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.
Analysts said the results indicate that company founder Jeff Bezos – who was named Time’s Person of the Year amid the dot-com boom of 1999 – was right when he pushed the company to “get big fast” at the expense of immediate profits in the late 1990s.
“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.”
Jenson said the company was helped by lowered book prices – which prompted strong sales in the holiday quarter – and a yearlong focus on cutting extra expenses.
“From operations to technology to international, everybody participated,” Jenson said. “We just did it simpler and better.”
Operating expenses were down 24 percent in the fourth quarter, compared with the year-ago period, Jenson said.
Jenson said Amazon.com has been affected by the stagnant economy “like everyone else,” but hopes to continue to lure shoppers by cutting prices.
On Tuesday, the company announced a plan to offer free economy shipping on some orders of $99 or more.
The Seattle-based company also recorded a “pro forma” net profit, which excludes certain costs such as losses from investments, of $35 million, or 9 cents per share, compared with a pro forma net loss of $90 million, or 25 cents per share, in the year-ago period.
Analysts polled by Thomson Financial/First Call expected a pro forma net loss of 7 cents per share for the latest period.
Despite the strong results in the fourth quarter, Amazon said it still expects operating results ranging between break-even to a loss of $16 million in the first quarter ending March 31, on net sales of between $775 million and $825 million. The company did not offer guidance on net income estimates.
For the fiscal year ended Dec. 31, the company recorded a net loss of $567.2 million, or $1.56 per share, compared with a net loss of $1.41 billion, or $4.02 per 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.
On the Net:
Amazon: http://www.amazon.com
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