Amazon.com’s Huge Loss Still Betters Forecasts
Amazon.com Inc. reported better-than-expected first-quarter financial results Wednesday, and said its largest product category is on track to post an operating profit by year’s end.
But the Seattle-based Internet retailing giant said its already-large losses quadrupled in the January-March period, causing its stock to fall in after-hours trading.
The company said losses from operations ballooned to $121.5 million, or 35 cents a share, beating a forecast of analysts polled by First Call/Thomson Financial by a penny. Amazon lost$36 million, or 12 cents a share, from operations in the same year-earlier period. Meanwhile, sales nearly doubled, to $573.9 million, beating analysts’ estimates by 10%.
Including acquisition-related charges, however, Amazon’s net loss hit $308.4 million, or 90 cents a share, five times the $61.7 million, or 20 cents a share, deficit of a year earlier.
Those figures--which bring Amazon’s red-ink tally to $1.2 billion since the company went public in 1994--appeared to deflate some investors, who had bid up the company’s shares over the last seven days in hopes of a more upbeat report.
Amazon shares slipped as much as $1.50, to $52, in after-hours trading, after gaining $1.06, to $53.50, in regular Nasdaq trading. The company’s shares had risen 14% since April 14, in part because of improved results reported by other e-tailers such as Priceline.com and Drugstore.com. But Amazon shares are down nearly 30% for the year, and are off 53% since hitting a 52-week high of $113 in December.
“All of these companies at some point have to make the transition from vaporware to a [profitable] business,” said Aim Advisors Inc. senior fund manager Jonathan Schoolar, whose Aim Weingarten and Aim Summit funds sold their Amazon shares last year.
Amazon founder and Chief Executive Jeff Bezos still isn’t saying when he thinks the company will turn a profit. He and his management team did, however, promise investors Wednesday that the company will have a positive cash flow at the end of the year, and therefore will have enough cash to cover upcoming capital expenditures. At the end of the first quarter, the company had $1 billion in cash.
The company’s U.S. books, music and DVD-video business will show an operating profit for the full year, but company executives didn’t elaborate on what charges they will include in accounting for the results. The books business made money in the fourth quarter.
Amazon executives said the company will continue to spend money to expand its operations, including more outlays to promote its Web site, improve distribution and advertise new offerings such as a lawn and patio store and a health and beauty offering from its partnership with Drugstore.com.
Amazon said it added 3.1 million customers in the quarter, bringing the total to 20 million, and that orders from repeat customers accounted for 75% of total sales--an indicator that many analysts believe is a sign of a company’s future strength.
Gross margin, which measures the profitability of sales, rose to 22.3%, from 22.1% a year ago.
At a Glance
Other technology sector earnings, excluding one-time gains or charges unless noted, include:
* Beyond.com said its first-quarter operating loss widened to $20.6 million, or 55 cents a share, from $18.1 million, or 64 cents, as the company lowered expenses. Revenue grew 64% to $31.3 million.
* BroadVision Inc., a maker of software to personalize what visitors see on Internet sites, said first-quarter net income more than tripled to $10 million, or 4 cents a share, from $2.9 million, or a split-adjusted 1 cent a share, a year ago, surpassing analyst estimates of 2 cents. Revenue more than tripled to $61.5 million from $18.5 million.
* InfoSpace Inc., which provides Internet content such as maps and yellow pages, said it earned $1.9 million, or 1 cent a share, excluding one-time charges and gains, as revenue more than tripled to $19 million from $5.3 million. Analysts were expecting a loss of 6 cents. In the year-earlier quarter, the company lost $5.6 million, or 3 cents. The company, which provides directories and other information to Web sites, said operating expenses climbed to $115.9 million from $10.9 million.
* Ingram Micro Inc. posted a 41% drop in net income to $24.7 million, or 17 cents a share, but the results beat analyst expectations by 2 cents. Sales rose 16% to $7.80 billion. Sales grew 11% in the United States, 17% in Europe and were up 28% in other parts of the world. Ingram Micro has struggled with falling prices for computers, increasing competition and the move by computer makers such as Compaq Computer Corp. to sell more machines directly to users instead of through distributors. Last year, the company lost 20 top executives and had lower profit or missed forecasts in three quarters.
* Macromedia Inc. posted fiscal fourth-quarter earnings of 22 cents a share, excluding acquisition-related expenses and other charges, beating analyst expectations of 16 cents, as sales grew 95% to $89.3 million. Including the one-time items, the maker of Web design software had net income of $5.54 million, or 10 cents a share, up from $1.88 million, or 4 cents, a year ago.
* MicroStrategy Inc., a maker of data-delivery software, said its first-quarter loss widened to $32.9 million, or 42 cents a share, $3.8 million, or 5 cents, on a restated basis, a year ago. Revenue rose 73% to $50.6 million.MicroStrategy last month revised its financial results for 1998 and 1999 to comply with recent Securities and Exchange Commission statements on when sales can be counted as revenue.
* Midway Games Inc., maker of video-game software and coin-operated games, reported a fiscal third-quarter loss of $11.5 million, or 30 cents a share, compared with net income of $1.06 million, or 3 cents, a year ago, as sales slid 32% to $54.9 million. Midway had warned earlier this month that it would lose money as demand slows while consumers wait for updated video-game systems from Sony Corp. and Nintendo Co. Analysts on average were expecting a loss of 27 cents, according to First Call/Thomson Financial.
* Keane Inc., a computer consulting company that specialized in repairing Year 2000 software problems, said its first-quarter net income tumbled 82% to $5.5 million, or 8 cents a share, as revenue dropped 24% to $216.2 million. Analysts were expecting earnings of 7 cents.
* NCR Corp. said first-quarter earnings doubled to $6 million, or 6 cents a share, even as sales lagged on lingering worries by customers about Y2K computer problems. The computer and software company was expected to earn 5 cents. Sales declined 5.9% to $1.26 billion as a 73% jump in data-warehousing software sales failed to offset the Y2K concerns and restructuring moves.
Associated Press and Reuters were used in compiling this report.
