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Amazon to beat 1Q targets
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April 9, 2001: 12:44 p.m. ET
Online retailer to top sales estimates, post smaller than forecast loss
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NEW YORK (CNNfn) - Amazon.com Inc. said Monday it will report somewhat better-than- expected first-quarter results.
The online retailing bellwether said it expects revenue of $695 million, and a pro forma loss per share of 22 cents. Analysts surveyed by earnings tracker First Call had forecast revenue of $669.6 million and a pro forma loss of 30 cents a share in the period ended March 31.
The news sent shares of Amazon (AMZN: up $2.72 to $11.09, Research, Estimates) sharply higher in Monday trading, helping to lift the tech-heavy Nasdaq composite index.
Amazon said the results are proof that it is making progress in its goal of improving bottom-line performance. A year earlier, the Seattle-based company had sales of $574 million and a pro forma loss of 35 cents a share. Pro forma results exclude stock-based compensation costs, amortization of goodwill and other intangibles and any restructuring charges, and is the number followed by analysts.
The company's stock has plummeted more than 83 percent over the past year from a high of $68.43 last May. Its shares have fallen amid mounting concerns about its cash position as well as rising skepticism among investors about its profitability.
Although it is the largest online retailer, the company has never shown a profit. Jeff Bezos, the company's chief executive, told CNNfn in January that he expects Amazon to post an operating profit by the end of this year.
Monday's announcement seemed to ease some investors' fears about the company's profit prospects.
"For the fifth consecutive quarter, we saw substantial improvements in our operations and bottom-line performance," Bezos said in a statement. "Electronics demonstrated especially strong growth and improvements."
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Henry Blodget, an analyst who covers Amazon at Merrill Lynch, characterized the company's pre-announcement as indicative of "a solid quarter, not a blowout."
"Amazon's cash position appears to be healthy, above what we expected and in line with management's outlook following the fourth quarter," Blodget said in a note to clients Monday.
"The one blemish for the quarter will be that the U.S. books, music and video business didn't really grow, which we expected," Blodget added. "Most of the growth came from electronics and international (sales)."
The company said its gross profit from the sale of books, music and video products is expected to grow more than 30 percent on slight sales growth.
Much of the upside in the quarter's operating results can be attributed to cost-cutting measures the company put in place earlier in the year. When it reported fourth-quarter results in January, Amazon disclosed a broad restructuring plan under which it laid off roughly 15 percent of its work force and consolidated its distribution and customer service center network.
Including an estimated $150 million charge against earnings related to the restructuring, Amazon said it expects to post a net loss below $255 million.
Amazon also said its balance sheet should show cash and marketable securities of more than $640 million at the end of the quarter, and it still expects to end the year with cash and marketable securities of more than $900 million.
The company said annualized inventory turnover increased to 12 times during the period from 9 times the previous quarter.
Amazon beat forecasts when it reported fourth-quarter results, but at the time warned that sales for 2001 would be less than then analysts expected.
The company said it will release complete first-quarter financial results and provide further guidance for the remainder of the year after the market close April 24. 
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