Amazon.com Buys Chunk of Talking-Book Digitizer

Web retailer Amazon.com (Nasdaq:AMZN) said today it is acquiring a five percent stake in spoken-audio company Audible (Nasdaq:ADBL). In exchange, Wayne, New Jersey-based Audible will pay $30 (US$) million over the course of a three-year deal to see products such as its digital versions of talking books featured prominently on the popular Amazon.com site.

"We're always looking for new ways to deliver more for our customers," said Jeff Bezos, founder and chief executive officer of Amazon.com. "We've chosen Audible to be our exclusive provider because they have established the new standard in the delivery of spoken-word audio via the Web."

The companies did not say how much Amazon.com would pay for its share, but five percent of Audible could be worth more than $18 million, based on the price of the company's stock before the announcement.

Microsoft in the Mix

Earlier this month, Microsoft Corp. (Nasdaq: MSFT) (Nasdaq:MSFT), which has also invested in Audible, said that its Microsoft Reader software for displaying electronic texts will soon support Audible's technology for managing spoken-word audio.

Audible offers streaming-media and downloadable audio files ranging from news and commentary to full-length talking books for PCs and a growing list of portable digital-audio devices whose manufacturers are making their players "AudibleReady." These players will ship with AudibleManager software used to transfer the downloaded audio files from the users' desktop PCs.

"Amazon.com provides the ideal platform for our audio service," said Donald Katz, founder and chairman of Audible. "Our business synergy with Amazon.com's book and consumer electronics stores and their standards for customer excellence will strengthen our leadership position in the online digital spoken-word category."

The companies said the alliance will give Amazon.com's customers easier access to over 20,000 hours of digital audio content from Audible's Web site.

Year-End Financial Results

The announcement comes on the same day that Audible unveiled its year-end financial results, reporting a $13.5 million loss (or 85 cents per share) for fiscal 1999, compared to the loss of $8 million ($1.15 per share) in 1998. Total revenue for the year increased 363 percent to $1.7 million, the company said. That's up from just over $376,000 in 1998.

"Continued consumer acceptance of our services is reflected in both better than expected top line revenue and increased customer count," said Katz. "Our overall customer count grew sequentially by 54 percent from the third quarter of 1999 to more than 13,300 in the fourth quarter."

He said that Audible has made "significant strides" in reaching agreements with manufacturers of portable digital audio devices through the company's AudibleReady program. "We're confident that the pending launch of the AudibleReady Diamond Rio 500 will illustrate the effectiveness of our strategic relationships, and we look forward to extending this success to the many other AudibleReady digital audio players as they become available this year."

Q4 Losses Predicted for Amazon

Amazon.com is scheduled to announce the results of its most-recent quarter on Wednesday, with analysts predicting a per-share loss in the neighborhood of 48 cents.

Last week, Amazon.com announced it was laying off about 150 employees, or about two percent of its workforce. However, a company spokesman described the cut as organizational tidying and said Amazon.com expects to continue hiring in growth areas.