Wednesday, January 27, 1999 Published at 16:40 GMT
Business: The Company File
No end to Net stock boom?
Amazon is determined to maintain its leadership position in Net commerce
In the topsy-turvy world of Internet-related share trading, heavy losses reported by online bookseller Amazon.com have boosted the company's share price, while an Internet company that actually made a small profit saw its shares soar by a third in a single day.
Share in eBay, the online auction house forged ahead in early trade, rising 74 3/16 to 295 1/16, after it reported an increased quarterly profit of $2.8m.
The company, with sales of $47m last year, is now worth $11.8bn (£7.5bn).
And shares in Amazon opened 15 7/16 higher at 130 17/32 after the company reported an increase in losses in the latest quarter. At current market prices, Amazon is now worth $20.4bn (£12bn).
Amazon's losses are the result of its aggressive efforts to maintain its leadership position in Internet commerce. Excluding acquisition-related costs, the Seattle-based company said it lost $22.2m (£13.2m), or 14 cents a share, in the fourth quarter. This compares with a loss of $10.8m or 8 cents a share a year earlier.
Analysts had been expecting a bigger loss of 18 cents a share.
Including $24.2m costs related to acquisitions, the company suffered a net loss of $46.4m, or $0.30 a share in the quarter.
Revenues for the quarter, as previously reported, rose nearly 300% to $253m (£153m) from $66m, reflecting strong Christmas sales of books and music.
"Amazon.com is still a small and young company relative to many offline retailers, and we must ensure that we build the strongest customer relationships possible during this critical period," said chief executive Jeff Bezos.
He said the company planned to invest even more aggressively in 1999 than it had in the past. "Our goal is nothing short of building the world's most customer-centric company," he said.
In particular, he mentioned the company's plans to open a huge new distribution facility in Nevada in the first half of the year.
For the year, the company lost $124.5m (£75.4m) or 84 cents a share, compared with a loss of $31m or 24 cents a share in 1997.
Revenues rose to $610m (£369m) from $148m. The company said it had quadrupled its customer base within the year, and now had a total of 6.2m accounts. More than 1.7m customers were added in the last quarter alone.
Profit boost for eBay
It also said it planned a 3-for-1 split of its shares.
The company reported net income, excluding various expenses, of $2.8m, or seven cents a share, compared with $214,000, or one cent a share a year earlier.
The company said the results reflected increased activity on its site. Because the company brings buyers and sellers together but does not actually handle merchandise, its overheads are relatively low. A large portion of its sales translate directly into higher profits.
Mary Whitman, chief executive of eBay, said that Internet stocks had caught the imagination of the investment community, and represented the next industrial revolution.
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