Amazon.com Takes A Dip In Black Ink22 Jan, 2002 By: Joan Villa
Amazon surprised Wall Street with earnings that made good on the company's promise to show pro forma operating profit, then took an extra step by eking out a 1-cent-per-share profit of $5 million for the fourth quarter according to generally accepted accounting principles.
The online store is the first e-tailer to be profitable and the company's stock shot up 25 percent and held at more than $12.70 per share for most of the day. Amazon posted a net loss of $545 million in fourth quarter 2000.
Amazon's fourth quarter sales climbed 15 percent to $1.12 billion. Net sales in books, music and video edged up 5 percent to $538 million, with the division's pro forma income from operations reaching $64 million versus $39 million in the year-ago quarter.
For the full year ended Dec. 31, net sales in books, music and video totaled $1.688 billion, declining slightly from sales of $1.698 billion in the previous year, but the division's pro forma income from operations more than doubled to $156.7 million from $71.4 million in 2000. Overall, the company halved its net loss for 2001 to $567 million from $1.4 billion in 2000.
"I thought they would achieve operating profit but nothing close to the $59 million they achieved [on a pro forma basis excluding charges," explained analyst Jeetil Patel at Deutsche Banc Alex Brown.
Strength in the international business drove sales, but Amazon achieved unexpected growth in its core books, music and video division, led in large part by the popularity of the DVD format.
Patel credits the unexpected success to stronger-than-expected holiday sales, less online competition and the fact that consumers are growing to accept the Amazon name as a brand they can rely on for reliable fulfillment on the Web.