Amazon Reports Busiest Season

By David Colker

Dec. 28, 2004 12 AM PT

Times Staff Writer

Amazon.com Inc. shares shot up more than 8.5% on Monday after the online commerce giant confirmed that -- once again -- it had its busiest holiday season ever.

That didn’t come as a surprise to analysts.

“Online is still such a small segment of overall buying that there is a lot of headroom for them to grow,” said Martin Pyykkonen of Janco Partners in Denver.

Trading in Amazon stock had been relatively quiet in the weeks leading up to Christmas and news that the company was indeed still growing prompted individual investors to bid up the stock, analysts said. Amazon shares rose $3.32 on Monday to $42.25 on Nasdaq.

Amazon has been lagging behind Yahoo Inc. and EBay Inc. “pretty badly in terms of stock price performance,” said Doug Foreman, chief investment officer for TCW Group in Los Angeles. “So incremental good news was able to move the stock, maybe more than it should.”

TCW holds Amazon shares in the funds it offers.

Analysts said investors also seemed heartened that sales at Amazon -- which opened its virtual doors in 1995 as an online bookseller -- were diversifying.

For the first time, books weren’t necessarily the top moneymaker on Amazon’s website, spokesman Craig Berman said. Over the Thanksgiving weekend, at least, that honor went to consumer electronics, which have been sold by Amazon for five years.

“It stressed the fact that people were coming to Amazon for DVD players and televisions,” said Hamed Khorsand, a research analyst with BWS Financial in Granada Hills. “That kind of diversification helps protect them if one of their sales segments goes soft.”

Of particular note, he said, were jewelry sales. Amazon said it had sold more than one watch per minute since Thanksgiving.

“Jewelry is an explosive sales potential area for Amazon,” Khorsand said.

Before Monday’s announcement, the consensus of analysts polled by Thomson First Call was that Amazon would ring up $2.4 billion in sales during the last three months of the year. That would amount to a 26% increase from the $1.9 billion in revenue the company took in during the fourth quarter of 2003. Amazon’s fourth-quarter results will be released in January.

Amazon remained the most popular e-commerce site for holiday shoppers as measured by the number of people who paid it a visit.

According to the market research firm ComScore Networks of Reston, Va., about 20.5 million U.S. shoppers visited an Amazon site in the week ended Dec. 19. That’s up 24% from the comparable week last year.

In general, online sales probably will be stronger than initially expected for November and December, according to ComScore. The firm raised its estimate last week for total online sales in the two-month period to as much as $15.7 billion, compared with total sales of $12.3 billion last year.

Particularly strong were sites that had both an online and offline presence, ComScore analyst Dan Hess said.

“We are seeing growth of retailers who make it easier for shoppers to decide how, when and where they want to make the transaction,” Hess said. “If a retailer has a foot in both areas, a consumer can buy an item online and then drive down the street to pick it up at the store. And it makes returns easier.”

(BEGIN TEXT OF INFOBOX)

Online shopping

Amazon.com was the leading online retailer during the week before Christmas.

Number of visitors to each site for the week ended Dec. 19* (percentage change from the week ended Dec. 21, 2003)

(In millions)

Amazon sites (+24%): 20.5

Wal-Mart (+115%): 15.6

Shopping.com sites (+46%): 9

Target (+58%): 8.2

Yahoo Shopping (+1%): 8.1

Overstock.com (+94%): 6.6

Best Buy sites (+35%): 5.9