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Tech Industry

Holidays boost Amazon's bottom line

The online retail giant beat analysts' expectations, but slim gross margins continue to make it tough for the firm to break even.

Internet retailer Amazon.com had a huge holiday season, reporting fourth-quarter revenues of $252.9 million today, but the retailer of books, music, and videos continued to run in the red, losing $17.8 million or 14 cents a share.

The loss beat Wall Street expectations of an 18-cent per share loss, according to First Call. For calendar 1997, Amazon reported $610 million in revenues and a loss of $74.4 million or 50 cents a share.

Amazon has become a bellwether of the online retail sector, and today's report puts real numbers on the widely held belief among e-tailers and e-commerce analysts that business boomed over the holiday season.

"The indication is that fourth quarter did as well as everyone expected," said James McQuivey, senior analyst with Forrester Research's online retail group.

Amazon had reported January 5 that it expected fourth-quarter revenues of about $250 million, driven by strong holiday sales. But the company said "significant sales of video and music lowered gross margins, as did aggressive product pricing."

Also reporting earnings after the market closes today were personal auction site eBay, which also beat expectations, and Egghead.com, which a year ago shuttered its 80 physical storefronts to become an online-only vendor of software and computer gear.

In addition, Net payment firm CyberCash reported its earnings today before the market opened. The company lost 46 cents a share on revenues of $4.4 million for the quarter ending December 31, beating analysts' expectations. Revenues for the quarter jumped 120 percent compared to 1997. For the year, CyberCash had revenues of $12.6 million, up from $4.5 million in 1997. Total losses amounted to $2.15 per share.

Amazon's strategy has been to invest heavily in marketing to build its brand, rather than pushing for quick profitability. It also is aggressively expanding its product lines. On November 11, it opened separate video and holiday gift stores, following the June 11 opening of Amazon's music outlet.

Amazon's stock price has fluctuated widely--on January 8, shares traded as high as 199.125, although it did not close that high. Within the last year, the stock has traded as low as 9.25, but it has climbed steadily since October, when it was trading at 40. Prices have been adjusted for a recent stock split.

Amazon's stock traded at 114.8125 in afternoon trading, up 2.4375. Yesterday it lost 10.625, apparently in anticipation of today's earnings report.