Amazon.com Reports Loss, but Less Than Expected
Amazon.com Inc. said Wednesday that its loss widened in the first quarter, although it was less than analysts expected, as the giant Internet merchant racked up huge sales but boosted spending on marketing, promotions and the development of new businesses for its site.
Amazon lost $36.4 million, or 23 cents a share, in the latest quarter, excluding one-time merger-related costs. That compared with a loss of $10.4 million, or 7 cents, a year ago. Wall Street had expected a loss of 29 cents a share.
Revenue climbed to $293.6 million from $87.4 million last year, topping the forecast of about $260 million from analyst Lauren Cooks Levitan of BancBoston Robertson Stephens.
During a conference call with analysts, Chief Financial Officer Joy Covey said operating losses in the second quarter will be two and a half times greater than the $30.6 million the company reported for the recently completed first quarter.
“With our recent acquisitions and the many investments we are making, it is certain our operating losses will increase substantially in the near quarters,” Covey said.
Covey also said revenue growth will likely slow during the second quarter. Previous quarters had benefited from substantial new product initiatives and geographic expansions, neither of which will help the current quarter, Covey said.
The comments sent Amazon’s stock down in after-hours trading. Shares in the company, which issued its earnings after the market closed Wednesday, closed at $193.50, down $12.38, on Nasdaq. After the earnings report, the company’s stock traded as low as $182.38.
Amazon saw its customer base swell to 8.4 million in the quarter, nearly four times the 2.2-million base it had a a year ago.
Expenses rose as the company bought stakes in online firms such as Drugstore.com and Pets.com, moved into businesses including auctions and electronic greeting cards, boosted marketing spending and expanded its distribution network.
Even so, that spending is drawing more customers to the retailer’s Web site and will eventually yield profit, investors said.
The Seattle-based company hasn’t made a profit since it started selling books on the Internet in 1994, but analysts said the company needs to spend heavily now to cement its presence on the Web and establish itself as a leading brand.
Jeffrey Bezos, Amazon’s founder and chief executive, said, “We have begun and will continue to build out a significant distribution infrastructure. This will give customers greater availability, faster shipping times and even better service.”
