Amazon posts first net profit

By NICK GOODWAY FOR MAILONLINE
Updated:

 

ONLINE bookseller Amazon topped its own and the most optimistic market forecasts as it revealed its first ever profit. The Seattle-based e-tailer, founded by Jeff Bezos, had promised an operating profit in the fourth quarter but actually produced a modest net profit after paying interest on its $2bn (£1.4bn) debt.

Christmas shoppers turned out in force on both sides of the Atlantic, flooding Amazon's portals. This produced a 15% year-on-year rise in quarterly sales, topping $1bn for the first time at $1.12bn.

That produced a turnaround from operating losses of $60m in the fourth quarter of 2000 to an operating profit of $59m in the latest three months.

On the more widely recognised GAAP accounting standard, the about-turn was even more startling. Amazon swung from a net loss of $545m to a modest profit of just $5m. That represented a swing from losses of $1.53 per share to earnings of one cent per share.

Head of Amazon's international operations, Diego Piacentini, said: 'We not only reached our goal but beat all expectations. This shows that the model really works. Once the fixed costs have been covered, our profits grow with every extra unit we ship.'

He also revealed that Amazon's two leading international portals - in Britain and Germany - had broken into profitability three years after they were launched.

But for the full year, Amazon made a net loss of $567m compared with a deficit of $1.41bn in 2000. However, Piacentini said the group now expected to be profitable for the whole of 2002.

Amazon forecast that for the first quarter it would come in between break-even and losses of $16m, while for the full year it expects sales to grow 10% and to make a net profit of $30m or more.

Direct sales were boosted not only by the continuing success of the adventures of child wizard Harry Potter but also from rapid growth in demand for DVDs.

Amazon also began to make serious revenue from its partnerships with other retailers such as Waterstone's, Virgin Wines and Carphone Warehouse, and from its second-hand or auction businesses.

In Britain, Amazon shipped 4.7m items during November and December, up 38% on the same period a year ago. Its top sellers included Jamie Oliver's latest Naked Chef cookery book and the four-book boxed set of Harry Potter adventures.

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