Updated from 4:18 p.m. EST



(AMZN) - Get Amazon.com, Inc. Report

on Tuesday set plans to slash 1,300 jobs, as it seeks to turn a profit for the first time. But the online retailer also cut deeply into its revenue-growth guidance for 2001 and offered investors assorted other bad news.

Surprising no one, Amazon beat Wall Street's earnings estimate by a penny, posting a pro forma fourth-quarter loss of 25 cents a share. That's narrower than the 26-cent loss forecast by analysts surveyed by

First Call/Thomson Financial

and the year-ago 55-cent loss. Amazon's sales rose to $972 million, slightly above the $960 million it forecast three weeks ago but below the $1 billion analysts had expected before its

Jan. 8 preannouncement.

The company said it plans to be profitable on a pro forma basis by the fourth quarter of 2001; it has never before offered specific profit guidance, though it has guided on revenue growth expectations. (It is important to remember the company said it will become profitable on a pro forma basis, excluding noncash charges such as amortization of goodwill and investment gains and losses. But these excluded costs amounted to $994 million in 2000. And including those items, the company lost $545 million in the fourth quarter.)

Analysts had expected Amazon to cut its 2001 revenue forecast to $3.7 billion to $3.8 billion, from the original $4 billion projection. But in its earnings press release, Amazon forecast 2001 revenue growth of 20% to 30% over 2000's $2.76 billion, meaning the company expects 2001 revenue of $3.31 billion to $3.59 billion. The company also projected first-quarter revenue of between $650 million and $700 million, well short of the $806 million consensus estimate.

"To me the most important thing was that management was swift to recognize the change in growth trajectory," says Kevin Silverman, an analyst at

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. Silverman has an accumulate rating on Amazon.com, and his firm does not have a banking relationship with the company.

For investors, however, the cut in growth projections is significant. "It means that the ultimate size of the company is going to be smaller than you thought," says Silverman. He has a $30 12-month price target on the stock, a target he may change in the coming days after he analyzes Tuesday's data.

In another key metric for analysts, the company said its fulfillment costs -- expenses for shipping -- hit 13.5% of revenue, slightly more than the 12% to 13% analysts had hoped for. Falling fulfillment costs are viewed as a key component to Amazon's efforts to boost its profit margins and become more efficient.

In a conference call with reporters, Chief Financial Officer Warren Jenson described the job cuts as "painful, but very necessary" for the company to become profitable. The company will close a distribution center in Georgia and a customer service center in Seattle. Jenson declined to say which departments would be affected at its corporate headquarters.

Jenson blamed the slowing economy for the company's lagging growth, but clearly, Amazon's announcement will be viewed as another sign of the ills plaguing online retailing.

Silverman downplayed much of the economy-as-scapegoat theory, instead laying the blame on bloated projections of how fast online retailing would grow. "I would say that the pundits' projections of how rapidly the channel shift would occur were overstated," he says.

Amazon and online auction site


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are the two premier e-commerce sites. But while eBay has been consistently profitable, Amazon has run steep losses. And though many analysts remain optimistic that the company's large war chest -- about $1.1 billion in cash at the end of the fourth quarter -- is enough for the company to become profitable without having to tap the capital markets for more cash, the debate about Amazon's prospects has pummeled the stock in recent months, driving it into the teens from the $80 range over the last year. The stock dropped $1.06 Tuesday to close at $19.06 and was off an added 93 cents after hours on