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Tuesday, January 5, 1999 Published at 16:06 GMT

Business: The Company File

Christmas sales boom for

Online yet a sales-rich, profit-poor business

Leading Internet bookseller has reported a 250% increase in fourth-quarter sales for 1998.

The result adds to the growing body of evidence that electronic commerce over the Internet is increasing at an exponential rate. But online sellers are still struggling to turn this success into profits.

The BBC's Richard Quest reports on the Amazon boom
The company said sales for the three months to December were $250m, 250% up on the same period in 1997 and well up on the $153m in the three months to September. The performance should bring full-year sales for 1998 to about $607 million, up from $66 million the previous year.

Jeff Bezos, the company's founder, chief executive and 48% shareholder, said in a statement: "We had more business than our most optimistic projections. If the result can be repeated...Amazon will top the $1bn annual sales level in 1999.

Unprofitable success

However, announcing the latest figures, Amazon cautioned that the jump in sales would not translate into reduced losses.

Despite customers flocking to their online store in the run up to Christmas, aggressive pricing and big sales of low-margin music and video products cut profit margins.

The company that leads the world in online book selling after investing heavily in what it sees as the future of book retailing, still runs at a loss after launching in 1994. The costs of mergers and acquisitions saw the company lose $45m in the third quarter of 1998 despite sharply rising sales.

However, Amazon said more than 1m new customers shopped online with the company between mid-November and the end of December, with over 7.5m items sold - more than it shipped during all of 1997.

Amazon shares had risen to $124.87 by 1530 GMT. Its share price has climbed from $10 a year despite more shares being issued in the meantime.

Christmas spree

Online service provider America Online said on Monday that its subscribers spent $1.2bn on its network, the online equivalent of a shopping mall, during the holiday season.

Netscape Communications said its internet portal site Netscape Netcenter has surpassed 10m members.

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