Amazon Loss Smaller Than Expected but Still Much Larger Than Last Year - TheStreet

Amazon Loss Smaller Than Expected but Still Much Larger Than Last Year

The company met or exceeded several numbers that some analysts said were the linchpin for determining the firm's success for the quarter.
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Amazon.com

(AMZN) - Get Report

reported a third-quarter loss today that was 2 pennies smaller than Wall Street expected, but it was still far larger than a year earlier because of the top online retailer's aggressive investments in expansion.

In after-hours trading, Amazon's stock gained 5/16 to 76 1/4 after shares for the stock -- on the upswing since August -- had tumbled 5 3/8 during the regular trading period.

Excluding costs from its expansion efforts, Amazon posted a pro-forma loss of $86 million, or 26 cents a diluted share, more than triple its loss of $24 million, or 8 cents a share, in the 1998 third quarter. A consensus of Wall Street analysts polled by

First Call/Thomson Financial

expected Amazon to lose 28 cents a share.

The net loss totaled $197 million, nearly quadruple the $45.1 million loss in the year-earlier quarter. Revenues more than doubled to $356 million from $154 million in the comparable 1998 quarter.

The company's expansion efforts included adding an online toy store and electronics store and starting zShops, Amazon's online shopping mall.

But the Seattle-based company met or exceeded several other numbers that some analysts said were the linchpin for determining the company's success for the quarter. Amazon added 2.4 customers in the quarter, bringing the overall total to 13.1 million, while repeat customers made up 72% of the company's sales.

In his quarterly assessment of Amazon before its earnings were released, Henry Blodget, an analyst with

Merrill Lynch

, stated he expected Amazon to attain 2.1 million new accounts, for an overall total of 12.8 million -- targets that Amazon exceeded. He also expected the company to have 72% of its sales come from repeat customers -- and Amazon met that expectation.

Amazon executives said they expect further growth in its customer base for the upcoming fourth quarter, citing the upcoming holiday season. To ensure that, Amazon is tripling its marketing costs for the upcoming quarter.

"We are taking no chances and kicking in the after-burners for Q4," Jeff Bezos, the chief executive, told analysts during a conference call. "We simply cannot afford to not meet demand."

Bezos said Amazon would "remain maniacally focused" on its customers while continuing aggressive investments.

Meanwhile, executives foresee operating losses to narrow next year -- to the point of attaining single-digit losses for the 2000 fourth quarter. At the same time, they said that if more investment opportunities present themselves, Amazon could jump on them, thereby increasing further high operational losses.

Blodget of Merrill Lynch then wondered why analysts would hold the executives at their word when it came to improving operational losses, saying, "Should we bother to project that?"

Amid laughter from the executives, Bezos said he understood the query but hoped Amazon would always uncover good investments.

Amazon's announcement came out hours after a potentially significant competitor announced it was going public.

Buy.com

, an Internet superstore, sells similar goods such as books and videos, but also offers computers and software. Buy.com reported revenue rose more than four-fold to $160 million in its third quarter, compared with the $35 million in the comparable 1998 quarter.