Internet retail giant Amazon.com posted its first-ever net profit Tuesday as strong holiday sales helped it beat its own forecasts and Wall Street's expectations.
The Seattle-based online superstore, which has lost nearly $3 billion since it went public in 1997, said its fourth quarter net profit — including charges like acquisition expenses, stock compensation and interest payments on debt — was $5 million, or 1 cent a share, compared to a loss of $545 million, or $1.53 a share a year earlier.
Revenues grew to a record $1.12 billion from $972 million a year earlier, growth of 15 percent that was three times faster than what most Wall Street analysts had expected.
The Seattle-based company also posted a pro forma net profit — a figure which includes interest but excludes other costs and is the figure watched by Wall Street analysts — of $35 million, or 9 cents a share, compared to a loss of $90 million, or 25 cents a share last year and beating analyst estimates of between 4 and 8 cents.
The results were helped by lowered prices and companywide penny-pinching.
"We nailed this quarter from a financial perspective,'' chief financial officer Warren Jenson said in a conference call with reporters.
Amazon had come under continual fire from many investors and analysts for its mounting losses and practice of focusing not a net profit, but on a "pro forma operating" figure that excludes many costs.
The net profit, announced hours before the opening of U.S. markets, surprised Wall Street because Chief Executive Jeff Bezos had promised only to break even on a pro forma operating basis.
Analysts said the results indicate that Jeff Bezos — the company founder who was named Time's Person of the Year amid the dot-com boom of 1999 — was right when he pushed the company to "get big fast'' at the expense of immediate profits in the late 1990s.
"E-commerce isn't an easy matter,'' said Jeetil Patel, an analyst with Deutsche Banc Alex. Brown. "It took the company $1.2 billion in revenue to achieve a profit, so scale is definitely a critical success factor. Not a lot of smaller companies will be able to pull this off.''
Jenson said the Seattle-based company was helped by lowered book prices — which prompted strong sales in the holiday quarter — and a yearlong focus on cutting extra expenses.
"From operations to technology to international, everybody participated,'' Jenson said. "We just did it simpler and better.''
Jenson said Amazon.com has been affected by the stagnant economy "everyone else,'' but hopes to continue to lure shoppers by cutting prices.
On Tuesday, the company announced a plan to offer free economy shipping, called Super Saver Shipping, on some orders of $99 or more.
Patel said the outlook proves that e-commerce is still quite seasonal.
"This is a step in the right direction,'' Patel said, and the company now has to work on keeping profits steady throughout the year.
For the fiscal year ended Dec. 31, the company recorded a net loss of $567.2 million, or $1.56 per share, compared with a net loss of $1.41 billion, or $4.02 per share, in 2000.
Net sales were $3.12 billion compared with $2.76 billion in fiscal 2000.
Jenson said the company ended the quarter with about $1 billion in cash, slightly higher than the $900 million the company had originally projected.
Reuters and the Associated Press contributed to this report.
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