Amazon pleases Wall Street

The online retailing sector has received a boost, with leading web firm Amazon.com reporting strong sales growth during the last quarter of 2000.

In a trading statement, Amazon said its sales volume reached $960m, a gain of 40%. The firm now has 29m registered customers, up four million or 16% over three months.

The company is still making a loss, but the figures were good enough to convince Wall Street analysts that Amazon can pull through and turn in a profit in the near future.

"Yes, they'll live. Yes, they'll be profitable, but not as profitable as some expected", said Jeffrey Fieler of investment bank Bear Sterns in New York.

Once the full results are in, analysts expect Amazon to report a net loss of 26 cents a share over three months, compared with 55 cents a share a year ago.

The performance of Amazon is seen by many experts as a key indicator for the health of the business-to-consumer or b2c sector of the net economy.

Investors like the news

Amazon's sales growth was good enough to persuade investors rush into the stock. In after hours trading on Monday, Amazon's share price rose 13%, before falling back slightly.

Kristine Koerber of WR Hambrecht & Co said the figures were "good news for the company, especially given the retail environment disaster we've seen this past season".

Both bricks-and-mortar and online retailers reported a drop in consumer demand.

One of the leading online firms in the US, etoys, had such a poor holiday season that it effectively put itself up for sale.

The billion dollar web company

If Amazon can maintain its sales growth, it will soon be the first online retailer to post sales worth one billion dollar in one quarter - a landmark for the industry.

But Amazon's rise has not been without problems. During the past year, the company has been dogged by analysts questioning its economic viability.

The Seattle-based firm has strongly rejected suggestions that it could run out of cash before moving into profitability.

On Monday, Amazon said it entered the year 2001 with $1.1bn in cash and marketable securities.

Some of its online partners, like furniture retailer living.com, have gone out of business, while its partner to sell cars, greenlight.com, recently had to cut staff.