Amazon rises on hint of profitability
Shares of Amazon.com surge as much as 7.65 percent today after the Net-retailing giant says its U.S. books business will turn profitable in the fourth quarter of 1999.
The stock jumped 5.53 percent, or 4.06 points, to 77.56 in afternoon trading. The retailer, which has been mired in losses as it continues to expand its leading position on the Internet, said that profitability is near in its U.S. books division in its 10-Q filing with the Securities and Exchange Commission yesterday.
"Although [Amazon] can provide no assurances, the company forecasts that its U.S. books business will be profitable in the fourth quarter of 1999," Amazon wrote.
Analysts said that Amazon may finally begin to break down its numbers to reflect how each division is performing rather than continually reporting increased revenues that are swallowed up by marketing and operating expenses.
"As they keep adding new categories, they keep adding new expenses, which are much greater than any profit they are generating with any category," E*Offerings analyst Andrea Williams said.
The U.S. book division is the most mature part of Amazon's business.
"If they can show people that they can turn these businesses profitable--without it always getting lost in the growth--then people will feel more comfortable on the long-term prospects of the stock," Williams added.