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Amazon Delivers Profit for 2nd Time

The online retailer earns $3 million on record holiday sales for second profitable quarter ever.

January 24, 2003|David Colker | Times Staff Writer

By a razor-slim margin, Amazon.com Inc. reported the second profitable quarter in its history after record holiday sales.

The Seattle-based online retailer said Thursday that it earned $3 million, or 1 cent a share, in the three months ended Dec. 31, compared with profit of $5 million, or 1 cent a share, in the same period a year ago -- the only other profitable quarter for the company since it went public in 1997.

For the year, Amazon's net loss was $149 million, or 39 cents a share, compared with $567 million, or $1.56 a share, in 2002.

Amazon's fourth-quarter sales of books, CDs, videos, apparel and other merchandise grew to $1.4 billion, from $1.1 billion last year.

Chief Financial Officer Tom Szkutak said net income was dragged down by losses incurred with the conversion of euros to dollars, resulting in a charge of about $38 million.

He said Amazon's free-shipping promotion for purchases of $25 or more cost about $30 million during the quarter.

But Chief Executive Jeff Bezos said the promotion was effective and would continue. "In the long term, it's the right investment to make," Bezos said.

The shipping promotion is expected to cost the company in excess of $100 million in 2003, Szkutak said.

Analyst David Kathman of Morningstar Inc. said the results were "solid," not overwhelming.

"A year ago, they blew everyone away with profits that were far better than anyone expected," Kathman said.

"This time it was not exciting, but you don't have to be exciting every time."

During the quarter Amazon launched its apparel store featuring clothing from Gap, Lands' End and other well-known brands. Bezos said it was "our most successful store launch" based on early sales, but did not break out figures.

Amazon said it expected sales in 2003 to grow 15%.

Amazon shares gained 62 cents to $21.79 on Nasdaq, but dropped to $21.45 in after-hours trading .

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