FOCUS-Amazon.com losses deepen, but sales up 236
percent
(Updates with comments from conference call, grafs 6-12)
By Martin Wolk
SEATTLE, April 28 (Reuters) - Internet retailing giant Amazon.com Inc. (AMZN - news) beat Wall Street expectations on
Wednesday by reporting first quarter revenue growth of 236 percent and losses that were smaller than forecast.
Amazon.com said it suffered a pro forma net loss of $36.4 million or 23 cents per share in the quarter, compared with a net loss
of $10.4 million or 7 cents a share a year earlier. Revenues rose to $294 million from $87 million a year earlier.
On average analysts had expected a loss of 29 cents a share, according to First Call.
The revenue figure exceeded the $253 million reported by Amazon.com in the seasonally strong December quarter, as
expected, and also exceeded the estimates of analysts who expected revenues in the $260 million to $270 million range.
The results were ''well in excess of my expectations,'' said Derek Brown, analyst at Volpe, Brown, Whelan & Co.. He called
the results ''a phenomenal quarter, as Q1 is a traditionally seasonally slow period of time for retailers.''
Amazon.com Chief Financial Officer Joy Covey warned that losses will deepen significantly in coming quarters beyond what
analysts had been expecting.
''With our recent acquisitions and the many investments we are making, it is certain our operating losses will increase
substantially in the near quarters -- relative to sales, in absolute dollars and relative to published estimates,'' Covey said in a
conference call with analysts, broadcast over the Internet.
She said quarterly pro forma operating losses later this year likely would be at least 2.5 times the $30.6 million level reported in
the first quarter.
She also said revenue growth would slow in the current quarter from historic levels in part because the company will not have
the benefit of significant new business like videos and music that have been boosting revenues. The company's new online
auction feature likely will have a minimal effect on net revenues, she said.
Chief Executive Officer Jeff Bezos said such results are consistent with the company's strategy of investing heavily for the
foreseeable future to build a virtual store where consumers can find ''anything they want to buy online.''
Just this week the company announced it is acquiring several new businesses including a rare books supplier for a total of $645
million in stock.
''It costs a lot of money to chase down new opportunities,'' said Steve Weinstein of Pacific Crest Securities.
Including $25.3 million costs stemming from previous acquisitions, Amazon.com lost $61.7 million, or 39 cents per share, in the
quarter. Amazon.com bought controlling stakes in Drugstore.com and Pets.com in the first quarter, part of its aggressive plan to
maintain a dominant position Internet retailing through acquisitions.
Bezos said he was pleased with the company's first-quarter performance as well as with the early results of the auction service,
launched in late March.
''After a strong first quarter we didn't think that they could improve that much but they've shown a 35 percent revenue growth
sequentially over the last quarter in what should be a seasonally slow time of year,'' said Lauren Levitan, analyst at BancBoston
Robertson Stephens. ''It shows that these guys are synonymous with online shopping.''
Amazon.com said it added 2.2 million customers in the quarter for a total of 8.4 million. More than 66 percent of orders in the
quarter came from repeat customers, the company said.
The results were issued after the close of Nasdaq trading, where Amazon fell $13 to close at $192.875 a share. In after hours
trading after the earnings release, the the stock slipped further to $185.75, traders said.
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