Amazon.com Piles Up Big Revenues, Big Losses

The revenues keep on growing for leading e-commerce retailer Amazon.com (Nasdaq: AMZN). So do the losses.

On Wednesday, Amazon.com reported its second-quarter results, announcing that net sales were $314.4 million (US$), an increase of 171 percent over the same period last year. The company also reported a second-quarter pro forma net loss of $82.8 million, or 51 cents a share. That was in line with expectations from analysts surveyed by First Call, but whisper numbers had been as low as 40 cents a share. Amazon.com stock, which gained 5 5/16 to 125 7/16 on Wednesday, fell hard in early trading today, shedding 8-15/16 to 116-1/2.

Amazon.com’s second-quarter pro forma operating loss was $67.3 million, more than five times the $12.8 million it lost in the same quarter of 1998. Amazon.com’s second-quarter pro forma operating loss in 1999 was 21 percent of net sales, compared to 11 percent of net sales in the second quarter last year.

More Than 10 Million Accounts

Acquisitions and marketing costs accounted for much of Amazon.com’s losses, but the spend-freely-while-we-grow strategy is paying off in one regard. Amazon.com’s customer accounts grew by 2.3 million during the second quarter, and the company reported that it had 10.7 million accounts as of June 30th. That’s more than three times the 3.3 million accounts the company had as of June 30, 1998. Meanwhile, repeat customers represented more than 70 percent of orders during the second quarter of 1999.

With its status as the top online bookseller secure for now, Amazon.com, which is the top online shopping site, according to Media Metrix, is turning the focus to other product categories and services. Last week, the company added new sections on its Web site for toys and electronics.

“We’re especially pleased that Amazon.com Auctions is our fastest growing business,” said Jeff Bezos, CEO of Amazon.com. “And looking at the first few days of sales in our new toys and electronics stores, we’re shocked and grateful. In fact, we believe we’re already the No. 1 seller of children’s products online.”

Bezos added that Amazon.com is going to continuing spending a lot of money to grow.

“For the rest of 1999, we expect to invest more heavily than we have in the past,” Bezos said. “Our goal remains to build the world’s most customer-centric company.”

Amazon.com Announces Stock Split

Amazon.com also announced a 2-for-1 stock split on Wednesday. The split will take effect on September 1st and be payable to shareholders of record on August 12th. This will be the second time this year Amazon.com has split its stock.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

E-Commerce Times Channels