Amazon to Begin Selling Computers
Amazon.com will move into a large, growing and difficult category this fall when it starts selling personal computers, company officials said Tuesday.
“Not only do we like PCs as a business in itself, but we really like what it does to our electronic store--it makes us more of a destination,” Amazon Vice President David Risher told an audience of about 100 analysts, large investors and reporters during the e-tailer’s annual financial overview here.
Details were sparse, with Risher saying only that Amazon “will take the risk away” by not handling inventory itself. Customers who buy computers from Amazon will receive the machines directly from the manufacturers.
Names of the PC manufacturers were not released, but Risher suggested it would not be those like Dell Computer that already sell extensively online.
Analysts were cautiously enthusiastic. “A very decent business to go after,” said Jeetil Patel, of Deutsche Bank Alex. Brown. “With no inventory, it’s all upside.”
Once upon a time Amazon didn’t bother with small steps. Its effervescent founder, Jeff Bezos, was the chief cheerleader for the notion that consumers would soon be buying everything from pet food to aspirin online. The company looked poised to lead, and maybe control, this revolution. And Amazon’s stock was an Internet darling.
Over the last year, reality set in. U.S. sales of Amazon’s oldest business--books, music and videos--have leveled off, the stock tanked, and a few analysts even began to raise questions about the company’s ability to survive.
Bezos, at least, hasn’t changed.
“If you can’t figure out how to have fun, you’re doing something wrong with your life,” he said before bounding onto the stage at the conference. Bezos then repeated declarations he has been making for several months now that Amazon intends to be profitable on a pro forma basis in the fourth quarter of this year. Pro forma profitability excludes certain costs, such as interest payments.
“No guarantees, but we feel very good about it,” Bezos said, adding that the firm was “positioned well” for pro forma profit in 2002 too.
The daylong session made clear that Amazon is trying to become a little more like the most successful online merchant, auctioneer EBay Inc. In the six months that Amazon has been selling secondhand material, 10 million items have been listed. And more than 8% of the books sold on Amazon’s site last week were used, officials said.
Many of the presentations addressed small changes in the supply chain, such as shortening the number of days it takes wholesalers to deliver materials to Amazon’s warehouses.
“There are a lot of little things you can do better every day,” said Chief Financial Officer Warren Jenson. “Don’t go for the moon shot.”
Also in the forecast: more joint deals along the lines of those Amazon has done with Toys R Us and bookstore chain Borders.
After it was all over, Merrill Lynch analyst and Amazon fan Henry Blodget declared, “No fireworks here . . . but they’re on their way to being a good operator in the class of Wal-Mart or Home Depot.”
But even Blodget felt compelled to emphasize, “That’s several years away.”
Amazon’s shares closed Tuesday at $16.44, down 47 cents on Nasdaq.
