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Buy.com Losses Smaller Than Anticipated

October 27, 2000|From Times Staff and Wire Reports

Internet superstore Buy.com Inc. reported narrower than expected third-quarter losses Thursday, continuing its slow trudge toward breaking even.

Excluding exceptional costs, the Aliso Viejo company lost $21.4 million, or 16 cents a share, compared to $23.9 million, or 27 cents a share, a year earlier. The results for the recent quarter beat analysts' estimates that the company would lose 18 cents a share.

Sales rose almost 20% to $190.2 million--a solid gain but far from the 79% jump reported earlier this week by leading e-tailer Amazon.com.

In part, Buy.com's more modest growth reflects its heavy reliance on computer product sales, which accounted for 83% of its quarterly revenue. The information technology market softened in the spring and remains sluggish.

Buy.com's other product offerings, which range from sporting goods to office supplies, have yielded mixed results. The company will close its unsuccessful online travel service this month, but reported that its video store sales doubled in the third quarter.

Buy.com, which gained its initial foothold by selling products at cost or even at a loss, has gradually increased its gross sales margins over the last year as part of its drive to reach profitability. The margins widened slightly to 6.7% from 6.1% in the second quarter, company executives said.

Despite increasing prices somewhat, Buy.com continues to add customers, more than doubling its rolls to 3.1 million from 1.3 million a year earlier. Two-thirds of its sales were made to repeat customers in the last three months, company executives said.

The company said it expected gross margins to be "slightly higher" in the fourth quarter, and that sales should increase about 30% next year. Analysts have projected that the e-commerce market overall will grow by almost 50% in 2001.

Including amortization of goodwill and other costs, the third-quarter loss was $30.5 million, or 23 cents a share, compared with a year-earlier loss of $33.2 million, or 37 cents a share, including the same items.

Buy.com's stock price continues to reflect investors' distaste for money-losing dot-coms. Its shares, which have lost 82% of their value since the company went public in February, fell 3 cents Thursday to $2.28 in Nasdaq trading. Buy.com announced its results after the close of regular U.S. trading.

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