Full text:
Seattle, July 13 (Bloomberg) -- Amazon.com Inc.'s second- quarter loss is
expected to be more than double analyst forecasts of three months ago, and the
online bookseller won't be profitable until 2000, First Call Corp. said.
Estimates for Amazon.com's quarterly loss widened to 43 cents from 20 cents,
according to First Call, which tracks and compiles analyst earnings estimates.
Projections for the second- quarter loss widened sharply after Amazon's first-
quarter loss in April and steadily increased during the following weeks, First
Call said.
Amazon's costs are rising as it spends more to advertise its new music
offerings and to compete with online sales from rivals Barnes & Noble Inc. and
Borders Group Inc., analysts said. In April, estimates were for a 1999 profit
of 2 cents a share. Now, analysts expect a 1999 loss of 73 cents, First Call
said.
They are going to spend heavily, and it will cost more to promote the music,''
said Ryan Jacob, portfolio manager at the Internet Fund, which owns
Amazon.com. shares.
Amazon rose 8 1/8 to 107 5/8. The Seattle-based company has not reported a
profit since it went public in May 1997.
Amazon spokeswoman Kay Dangaard declined to comment.
Expansion
Amazon bought three companies in April to expand into Europe and add online
video sales. The expansion adds to Amazon's payroll and increases its
technology costs, analysts said.
They said at the end of the last quarter that they would increase their
marketing expenditures,'' said Dain Rauscher Wessels analyst Mitchell
Bartlett, who has a ''hold'' rating on the stock and expects the company will
turn a profit in 2001.
Bartlett said he expects Amazon to lose 40 cents a share on sales of $111
million for the second quarter. The company lost 28 cents in the year-earlier
quarter on sales of $27.9 million.
Amazon's betting that by spending more on advertising, expanding into Europe
and selling products besides books, it will be able to pump up sales enough to
become profitable, analysts said. Sales from Europe, as well as from music and
videos, should boost the company's total 1998 sales to more than $500 million,
the Internet Fund's Jacob said.
The Seattle-based company is scheduled to report its earnings on July 22,
according to First Call. |
