PW: Revenues &Losses Jump at Amazon.com as Stock Sinks

Amazon.com had an eventful last week as the e-retailing giant lost its president to another Internet company, reported second-quarter results and saw its stock continue to struggle. For the second quarter ended June 30, 2000, revenues for the entire company rose 84.1%, to $577.9 million, while its net loss widened to $317.2 million from $138.0 million in last year's second quarter. Both the loss and revenue were less than analysts had expected.

One reason for the revenue shortfall was slowing growth in Amazon's core businesses of books, music and DVD/video, where sales rose 37.8% to $385.3 million. Despite slowing sales, Amazon reported that on a pro forma basis, its core unit posted a $10.1 million operating profit in the most recent period, compared to an operating loss of $11.1 million in last year's second quarter. Company chairman Jeff Bezos said Amazon is putting more emphasis on cutting costs rather than growing sales. Results in the book group were helped by the addition of gay and lesbian, Spanish-language and large-print stores within the Amazon site. The company also added 2.5 million new customers in the quarter, bringing the count to more than 23 million.

For the first six months of the year, revenues in its core segment jumped 43.8%, to $786.7 million, and the unit had an operating profit of $7.6 million, up from a $14.3 million operating loss in the comparable period in 1999. For the entire company, revenues rose 89.3%, to $1.15 billion, and its net loss increased to $625.6 million from $199.7 million in the first half of last year. Reacting to reports that the company was facing a cash crunch, Amazon chief financial officer Warren Jenson said the company had a cash balance of $908 million at the end of the June and that he expected Amazon to have about $1 billion in cash by the end of the year.

Prior to the release of its quarterly results, Amazon announced that Joseph Galli, who had been president for roughly 13 months, was resigning to head VerticalNet, a business-to-business company that operates 57 Web sites. No one is being named to replace Galli; Bezos will once again assume the title of president.

The events of the week took their toll on Amazon's stock, which fell from $41.12 per share on Monday, July 24, to $31.38 on July 27. Its stock is off 58% in the year.