Jeff Bezos, Chairman and CEO of Amazon.com

This is a partial transcript from Your World with Neil Cavuto, January 23, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Amazon is back on track. After the bell, the super online retailer megastore out with better than expected earnings.  Amazon making 19 cents a share in the latest quarter. That was fully a nickel better than expected. With us now the man who runs Amazon.com, Jeff Bezos.

Hey, Jeff, good to see you.

JEFF BEZOS, CHMN. & CEO, AMAZON.COM (AMZN): Hi, Neil.

CAVUTO: Well, you were given up for dead not too long ago. Your stock has been percolating, one of the best performing stocks off its lows we had last year. Is this a sign this continues?

BEZOS: Neil, I'm sorry, I can barely hear you because there is somebody in your control room who I am mostly hearing.

CAVUTO: I will have him shot. Don't worry.

(LAUGHTER)

CAVUTO: You're improving. Things are looking up?

Jeff, can you hear me?

BEZOS: Hello? Now I can hear you.

CAVUTO: I'm sorry, I've already had him executed. Now back to you.  Are you seeing things looking up?

BEZOS: Yeah. We just had a great Q4, wonderful holiday season, strong growth, reaccelerated growth. And the big thing that's been driving that is lower product prices and free shipping. The big announcement today is that we are leaving free Super Saver shipping at the $25 level in place as a permanent year-round, day-in-day-out offer. So people - that was one of the big questions that we had going into the quarter. Would we be able to do that on a sustainable basis? It is very expensive. It is going to cost us over $100 million in the coming year, but we do think over the long-term it will be great not only for customers, customers love this, obviously, but we think it will also be very good for shareholders.

CAVUTO: But you know, there are a lot of people still shorting your stock, saying that, you know, you just can't go on doing business like this, and that the way you would count for earnings, I don't want to get gobbledy-gookish about it, you really aren't making money. What do you say to them?

BEZOS: Well, what I would say to that is look at the free cash flow in the business. Over the trailing 12 months there have been $135 million of free cash flow generated. The business is performing very, very well financially. And a lot of that is driven by not only selection and convenience, which have been sort of the two pillars that we primarily built the company on, but starting about 18 months ago, a very relentless drive to lower prices, very systematically for customers.

CAVUTO: But still, Jeff, you know, if I...

BEZOS: All three of those pillars there, that is what is really driving this good financial performance.

CAVUTO: Let me ask you, though, if I were to compare you the traditional ways you measure, let's say, a Wal-Mart, or a Sears, or a J.C. Penney, you were a hurting puppy.

BEZOS: I just couldn't hear that last part.

CAVUTO: That you are hurting, if you were to be measured the way traditional retailers are?

BEZOS: I am not sure I would agree with that. I would say that if you look at the way long-term investors look at companies, one of the most important dimensions is free cash flow. Free cash flows, GAAP numbers, a very important metric, and free cash flow improved $300 million year-over-year.

CAVUTO: OK. Jeff Bezos, thank you very much. I apologize for the audio problems.

BEZOS: Thank you, Neil. My pleasure, always.

CAVUTO: Jeff Bezos of Amazon.com. I apologize to you folks as well.

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