Amazon sales lasso losses
Along with posting narrower net losses of $93.6 million, or 25 cents per share, the e-tail company says it will begin expensing the cost of stock options.
The e-tail giant reported a net loss of $93.6 million, or 25 cents per share, during the second quarter on revenue of $805.6 million. During the same quarter last year, Amazon posted a loss of $168.4 million, or 47 cents a share, on $667.6 million in revenue.
Excluding investment losses, stock-based compensation costs and the amortization of goodwill, Amazon reported a pro forma net loss of $4 million, or 1 cent per share. Wall Street analysts surveyed by First Call estimated that the company would post a 6-cents-per-share loss on this hypothetical basis.
The results marked the second straight quarterly loss posted by Amazon after it recorded its first-ever profit in the fourth quarter last year.
Amazon also announced that by the beginning of 2003 it would start counting as expenses all stock-based awards granted after that point. Accounting rules allow companies to exclude the cost of stock options from their earnings reports, but critics have charged that such exclusions allow companies to distort their actual financial performance and have called for reform. Amazon is among the first technology companies to adopt the accounting change.
Amazon increased its sales targets, predicting sales of $780 million to $830 million, compared with a First Call revenue estimate of $785 million.
The just completed quarter, which ended June 30, was one of mixed blessings for Amazon. In its core media departments, the company posted a profit but logged slow sales growth for another quarter. Revenue from the sales of books, music and video product increased just 5.6 percent to $411.7 million in the quarter from $389.7 million in the previous year.
Amazon has increasingly focused on ways to increase book sales in particular after seeing slow revenue growth in that area for much of the last year. Last month, Amazon began offering free shipping on orders of $49 or more, primarily good for purchases of its media products. Earlier in the year, Amazon extended a discount of 30 percent on books priced $15 or more.
But the company has seen increased competition in recent months from a resurgent Buy.com, among other companies. Buy.com bested Amazon's free shipping deal by offering free shipping with no minimum purchase and has marked its books down to 10 percent below Amazon's prices.
Amazon fared somewhat better with its sales of electronics, tools and kitchen products. The company increased revenue from such products by 15.7 percent to $128.4 million from $111 million in the previous year. Meanwhile, the company narrowed its loss from such products to $18.5 million in the quarter, compared to $41.3 million last year.
International sales also proved to be a big boost for Amazon. The company saw revenue from its international sites, such as those in the United Kingdom and France, jump 70 percent to $218.5 million in the quarter, compared with $128.3 million in the year-ago period. The company cut its losses from international sales from $30 million in the second quarter last year to $10.2 million this year.
Amazon also got help from its services business, which includes the used goods Marketplace and store-hosting operations for Target and Toys "R" Us. Revenue from Amazon's service business surged 22 percent to $47 million in the quarter just ended from $38.6 million in the same quarter last year.
Although profits from the services business surged 28.7 percent year over year, the impact on the company's bottom line was marginal. Profits from the services business increased to $5.6 million in the quarter from $4.3 million in the year-ago period.