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Accept misses estimates but sets profit roadmap Inc. (Nasdaq: AMZN) posted a wider-than-expected loss in its fourth quarter Wednesday, losing $185 million, or 55 cents a share, on sales of $676 million. But officials broke with company tradition and mentioned the "P" word -- profits.

First Call consensus expected the online retailer to lose 48 cents a share, but many analysts were projecting a loss of between 53 cents and 58 cents a share due to a series of inventory writedowns.

In the quarter, took a $39 million charge for inventory reductions, but officials said the company's operations would become more efficient. On an operating basis, lost $175 million in the quarter.

Clearly,'s philosophy of foregoing profitability for the foreseeable future and increasing expenses to provide top-notch customer service has rankled some analysts.

Officials on a conference call, however, moved to smooth things over. It worked.'s shares jumped to 77 in after-hours trading after closing up 2 to 69 7/16 in the regular session.

Bezos uses the "P" word

Chief financial officer Warren Jenson said its fourth quarter operating loss was at the high point and would come down throughout 2000.

"We have reached a tipping point in the business," said CEO Jeff Bezos, who said "profits" or "profitability" more than once. Bezos cited six goals: boost customer count, pursue operational excellence, continue to expand, expand internationally, partner with other e-tailers, and "drive toward profitability in each and every business we're in."

Bezos said margins would improve substantially.

"Our investment curve should be less steep and our time to profitability should be shorter," he said. "We expect overall losses to decrease."

Amazon received 73 percent of its fourth quarter sales from repeat orders and only spent $19 to acquire a new customer.

Jenson divided Amazon's businesses into groups. In the fourth quarter, operating losses for its retail business (books, music, toys etc.) were 20 percent of sales. A year from now, Jenson said operating losses would be 5 percent of sales, including any new retail stores.

"In 2000, we will reap the benefits of scale," said Jenson, who said gross margins would approach 20 percent in the first quarter and could improve throughout the year. Gross margins in the fourth quarter fell to 13 percent from 19.8 percent in the third quarter.

Sales soar

The $676 million in sales represents a 167 percent improvement from the year-ago quarter when it lost $22 million, or 17 cents a share, on sales of $253 million.

Earlier this quarter, predicted it would record total sales roughly $650 million.

In the quarter, its cumulative customer accounts grew by 3.8 million to more than 16.9 million.

Company officials credited strong electronics and auction sales for the top-line surprise. Officials said its book business was profitable, but didn't detail exact figures.

Predictably, the company's fulfillment expenses were 16 percent of its total sales, up 10 percent from the year-ago quarter.

Jenson said he expected strong growth in 2000, but sales would slip sequentially in the first quarter. However, first quarter sales would be "up strongly year over year."

In December, the site's reached climbed to 25.6 percent and unique visitors jumped to 15.9 million, according to Media Metrix.

Company officials said it was able to ship 99 percent of holiday orders, peaking with more than $16 million in shipments in a single day. Sales per customer who purchased in 1999 were $116, up from $106 for 1998.

It's not just books anymore

While U.S. sales of books improved 66 percent to $317 million from the year-ago period, those sales accounted for less than 50 percent of the company's total sales.

Its music sales soared to $78 million in the quarter, up 136 percent from the year-ago quarter. DVD and video sales were up more than 500 percent from the same time last year to more than $64 million.

Its toy and children's product sales were $95 million in the quarter, which looks impressive on its own but not so imposing considering eToys Inc. (Nasdaq: ETYS) recorded sales of more than $107 million in the same period.

Sales from its electronics, home improvement and auction services business checked in at roughly $51 million in the quarter.

Plenty going on

Amazon has had a busy month. First, the company's pre-announced sales of $650 million for the quarter. After investors and some analysts panned the stock for its profit outlook, Amazon detailed a barrage of strategic pacts that led many analysts to change their tune about the stock.

The company first inked a broad pact with (Nasdaq: DSCM) and

Last week, it said it was laying off 150 employees.

On Monday, Amazon said it bought a stake in Audible (Nasdaq: ADBL) in a deal where Audible will give the online retailer $30 million over three years.

One day later, Amazon bought a stake in in exchange for promotion.

Twenty-one of the 30 analysts tracking the stock maintain either a "buy" or "strong buy" recommendation.

First Call consensus expects to lose $1.16 a share in fiscal 2000.