Amazon reports smaller loss

Bezos appears to be delivering on his profit forecast

The world's leading online retailer Amazon.com on Tuesday reported a much smaller first-quarter loss and said it would report its first quarterly operating profit by the end of the year.

Amazon lost $49m, excluding a wide range of costs, compared with $99m and increased its revenues by 22% to $700m from the same time last year.

We are on track to reach our objective of pro forma operating profitability in the coming December quarter.

Warren Jenson
chief financial officer
Amazon

The results were boosted by strong sales of electronics which offset weak returns in its core books, music and video section, the company said.

"Again this quarter our customers responded with particularly strong purchase levels in our electronics, tools and kitchen stores and from our international sites," chief executive Jeff Bezos said.

The results have helped scotched concerns raised earlier this year that the company may be going out of business.

"We are on track to reach our objective of pro forma operating profitability in the coming December quarter," Warren Jenson, Amazon's chief financial officer, said in a statement.

Amazonshares closed at $15.68 on the Nasdaq, down 52 cents or 3.21%.

Loss warning

The Seattle-based company last week surprised everyone by saying it would post a smaller-than-expected first-quarter net loss.

Last week's forecast helped the stock pull away from year lows of $8.10 but the shares are still far below their year high of $62.38.

Amazon Chief Executive Jeff Bezos has pledged the company will turn a pro forma operating profit, before expenses like interest payments on $2bn in debt, in the fourth quarter.

Dot-bomb benefit

While the recent collapse of other dot-com retailers such as eToys made some wonder if Amazon would be the next to collapse, the company is expected to start benefiting from some of its main competitors being knocked out of the market.

The thinning ranks of the internet retailers has freed up about $1bn in online consumer spending that could go to Amazon, a Goldman Sachs research note has suggested.

It is shutting down a distribution facility in Georgia, partially closing another Seattle center and eliminating most of its Seattle customer service staff, which should translate into savings in the months ahead.

Also down the road will be an online baby store, Babies R Us, run with Toys R Us, which is Amazon's partner in the toy business, and a new partnership announced last week with rival bookseller Borders Group, both of which are expected to add to its revenues.