Amazon Is Back In The Red Despite Sales Increase - InformationWeek

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Amazon Is Back In The Red Despite Sales Increase

The Web's largest retailer had eked out its first profit in the fourth quarter of 2001.

Amazon.com Inc. was back in the red in the first quarter of 2002 after posting its first profitable quarter at the end of last year. The $23 million net loss for the quarter ended March 31 compares with a net loss of $234 million for the first quarter last year. Net sales increased 21% in the quarter to $847 million, from $700 million in the year-ago quarter.

Three months ago, Amazon, the Web's largest retailer, eked out a net profit for the fourth quarter of $5 million. At the time, it also posted a pro forma profit, which it had pledged to do, of $35 million. But in the first quarter, not only did it fail to repeat the net profit result, it also reported a pro forma net loss, which includes net interest expense, of $5 million, compared with a pro forma net loss of $76 million in the first quarter of 2001.

Amazon also announced Tuesday its third major price cut in the last nine months. "Lowering prices is working for us," CEO Jeff Bezos told analysts in a conference call. "This is a big deal," he said of the new 30% discount on books costing more than $15. "It may be expensive in the short term, but the long-term rewards are enormous."

Bezos was encouraged by Amazon's Marketplace--new, used, and refurbished items sold on Amazon product detail pages by small businesses and individuals. Marketplace sales jumped to 23% of total U.S. orders and 12% of U.S. units, compared with 4% of U.S. orders and 2% of U.S. units a year ago.

Amazon expressed optimism for growth in the second quarter, raising net sales estimates to between $765 million and $815 million, an increase of 15% to 22%.

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