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Amazon's Net Loss Narrows as Sales Grow

Popularity of 'Harry Potter' books helps online retailer exceed expectations and raise its outlook for the year.

July 23, 2003|From Times Staff and Wire Reports Inc. narrowed its net loss for the second quarter as free shipping and discounting policies helped the Seattle-based Internet retailer exceed analysts' forecasts and raise its projections for the year.

For the April-through-June quarter, Amazon lost $43 million, or 11 cents a share, compared with a loss of $94 million, or 25 cents, in the same period a year ago. Quarterly revenue of $1.1 billion was up 37% from $806 million last year.

Excluding certain noncash items, Amazon earned $42 million, or 10 cents a share, compared with a loss of $4 million, or a penny a share, last year. On that basis, the consensus estimate of analysts polled by Thomson First Call was a profit of 6 cents a share on revenue of $1.03 billion.

Amazon shares, which dropped 46 cents on Tuesday to $34.87 in regular Nasdaq trading, jumped to $36.81 in extended trading after the results were released.

"This company is firing on all cylinders," said Sandy Sanders, an analyst with Boston-based Evergreen Investments, which owns Amazon shares but does not do business with the company. "The average consumer is lazy, and Amazon makes it easy for consumers to shop."

The company said the number of products it sold increased by 42% in the quarter, including more than 1.4 million copies of "Harry Potter and the Order of the Phoenix," the latest installment of the book series.

Chief Financial Officer Tom Szkutak said Amazon's growth was fueled by its free-shipping offers and lower prices, which helped to drive revenue 37% higher.

"We're very pleased with the performance we had, with very strong electronics and general merchandise sales," he said. "We're also very pleased with our international performance."

The company raised its sales guidance for the full year, saying it expects revenue to be $4.9 billion to $5.1 billion. It expects operating income to be $215 million to $255 million.

The online merchant is aiming for an increase in revenue of about 20% this year, mostly by stealing sales from bricks-and-mortar stores. Last quarter, Amazon's book sales grew 10% while booksellers such as Barnes & Noble Inc. saw book sales shrink, Sanders said.

Times staff writer Alex Pham contributed to this report and Associated Press and Reuters were used in compiling it.

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