AMZN Sales hit $574 million; profitable year seen in book biz
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Amazon beats expectations Sales hit $574 million; profitable year seen in book biz
By Bambi Francisco, CBS MarketWatch
Last Update: 8:09 PM ET Apr 26, 2000 Internet Daily
Net headlines
SEATTLE (CBS.MW) -- Amazon.com on Wednesday reported a narrower-than-expected loss on revenue that doubled from a year ago, prompting the online retailing titan to project that its core book and music businesses will be profitable this year.
Amazon vs. Amex Internet Index
Shares of Amazon.com (AMZN: news, msgs) traded actively in after-hours Instinet action, but the stock's price was little changed. The stock rose 1 1/16 to 53 1/2 as of 4 p.m. on the Nasdaq and then traded at 53 in the evening session.
"We look for accelerating fundamentals, and we got that," said Anthony Noto, an analyst at Goldman Sachs. "They also provided great transparency on every metric I wanted."
If Amazon's stock goes down Thursday, it's a function of market dynamics, he added. After the market closed, Amazon said sales grew 95 percent to $574 million, up from $294 million in the comparable period a year ago, and 10 percent above analysts' average projection.
Amazon also reported a pro-forma net loss of $122 million, or 35 cents a share, vs. a loss of 12 cents in the same period a year ago, but better than the consensus estimated loss of 36 cents.
Value of customer grows
The Seattle-based company said books, music and DVD/video operations combined would be profitable on a pro forma operating basis this year.
Amazon also said its customer base grew by 3.1 million to 20 million customers. Repeat customer orders represented 76 percent of orders, up from 73 percent in the fourth quarter.
Moreover, Amazon squeezed more value out of each customer. Amazon reported trailing 12-month sales per customer of $121, up from $107 a year ago and better than the $116 projected by Goldman Sachs.
And even though the quality of customers appeared to rise, Amazon didn't have to spend as much to get them. The cost to acquire a customer fell to $13 from $19 in the previous quarter.
"We benefited tremendously" from "investment in customer experience," said Amazon President Joe Galli, responding to an analyst question on the conference call following the release. The "word-of-mouth benefit" is "incredibly powerful."
Jamie Kiggen, an analyst at Donaldson, Lufkin & Jenrette, attempted to get an idea as to how much the lifetime value of a customer might rise. "It's a reasonable question," said Amazon founder Jeff Bezos, the company's chairman and chief executive. "But it's hard to have a frame of reference."
Getting a handle on costs
Gross margins improved to 22.3 percent, up from 13 percent from the fourth quarter and better than the 19.8 percent expected by Goldman Sachs.
Those improvements came from increased sales by the Amazon Commerce Network, which is an "expanding set of product and service offerings powered by partners," and efficiencies in fulfilling customer orders.
Executives said that the Amazon network generated $19 million in the quarter.
Fulfillment costs declined from the fourth quarter and accounted for 17 percent of sales.
Bambi Francisco is Internet editor for CBS MarketWatch.
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