Amazon Loss Shrinks; AOL Buys Amazon Search Service

Amazon.com overshadowed its own second-quarter earnings Tuesday, in which it posted a loss of $168 million, by announcing that America Online has invested $100 million in the company and will pay for Amazon's search-and-personalization service. AOL plans to deploy the service in its Shop@AOL, CompuServe, and Netscape.com properites for the 2002 holiday shopping season. Neither party disclosed how much AOL is paying for the service.

The deal is the latest example of how Amazon is customizing its E-commerce technology and marketing it to online retailers, said CEO Jeff Bezos during a teleconference Monday. "Our partners can count on it getting better and better because we will continue to improve it for our own customers."

For the second quarter, Amazon's revenue rose 16%, to $668 million, from $578 million reported in the second quarter of 2000. Non-U.S. revenue shot up 75%, to $128 million, from $73 million. Revenue from sales of used merchandise--a new financial break out for Amazon--accounted for 10% of total sales.

Amazon CFO Warren Jenson says he still expects a pro-forma operating profit both for the fourth quarter and for the fiscal year. "This quarter, the United States was profitable on a pro-forma operating basis for the first time, and this is our sixth sequential quarter of improved absolute, pro-forma operating results." Jenson says third-quarter revenue will be $625 million to $675 million.