News Index :   e-Business

Date Posted	January 24, 2002
News Title	Amazon posts its first net profit
Posted By	News.Com
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Amazon reported net income of $5 million, or a penny a share, under generally accepted accounting principles, well ahead of analysts' expectations. Most analysts had predicted that the company would report a profit on a pro forma basis, which excludes a host of expenses and charges. Fourth-quarter sales were $1.12 billion, compared with $972 million a year ago. "I think everyone was surprised," said Jeff Fieler, an analyst at Bear Stearns. "It was the 81 percent in international sales growth that drove (the revenue) surprise. The rest comes from a lot of different places, predominantly from the cost side. There's lower marketing costs, a big improvement on fulfillment--in absolute dollars, it dropped by $21 million year over year." Amazon shares closed up 24 percent, gaining $2.44 to $12.60. "We just ran things much more smoothly," Amazon CFO Warren Jenson said in a conference call with analysts. Improvements in the company's operations will enable Amazon to cut prices and offer free shipping for orders above $99 while delivering results on the bottom line, said CEO Jeff Bezos. "Broadly speaking there are two types of retailers: those who work hard to raise prices and those who work hard to lower prices," said Bezos. "Either model can be successful, but we've decided to pursue the second model." For the Seattle-based company to post what some analysts would call a real profit under GAAP is quite a turnabout. Amazon had been blasted by accounting critics for being the poster child for pro forma accounting before it began reconciling its results to GAAP and providing investors a higher level of supplemental data. Nevertheless, many analysts and investors had pooh-poohed Amazon's profits pledge because it excluded a host of items such as stock-based compensation, goodwill, restructuring charges and one-time gains. © News.Com
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