CBSN

Amazon In The Black At Last

Israeli police take cover from paint thrown by settlers as they storm the rooftop of the synagogue of the Jewish settlement of Kfar Darom, in the southern Gaza Strip, Thursday Aug. 18, 2005.
AP
Sticking to its promise to reach profitability, Amazon.com on Tuesday posted the first profit ever for an online retailer.

Amazon.com rang up a fourth-quarter net profit of $5 million, or 1 cent per share. It lost $545 million, or $1.53 per share, in the same period a year ago.

The e-tailer also rang up $1.12 billion in sales, its first billion-dollar quarter in its history, thanks to strong demand in its core U.S. books, music and video segment. Quarterly revenue grew 15 percent to $1.1 billion from the same period a year ago. Sales also exceeded analysts' expectations of $1.01 billion by some $100 million.

Analysts said the results indicate that Jeff Bezos the company founder who was named Time's Person of the Year amid the dot-com boom of 1999 was right when he pushed the company to "get big fast" at the expense of immediate profits in the late 1990s.

"E-commerce isn't an easy matter," said Jeetil Patel, an analyst with Deutsche Banc Alex. Brown. "It took the company $1.2 billion in revenue to achieve a profit, so scale is definitely a critical success factor. Not a lot of smaller companies will be able to pull this off."

CBSNews.com

The latest from Wall Street
U.S. Stock Markets
Layoffs and Labor
The Federal Reserve
Excluding non-cash charges, stock compensation and other special items, Amazon.com reported a pro forma operating profit of $59 million. It lost $60 million in the same period a year ago. Savings from operations came from a significant decline in fulfillment costs.

In the final quarter of 2000, Amazon.com spent $131 million to fulfill its products. One year later, Amazon dropped that cost down by 17 percent to $109 million. But it didn't just stop there. Amazon drove down its general and administrative costs and marketing and technology costs as well.

Including interest expense, Amazon.com posted a pro forma net profit of $35 million, or 9 cents per share. Last year, mazon.com lost $90 million, or 25 cents per share. Analysts surveyed by Thomson Financial/First Call forecast a loss of 7 cents per share on revenue of $1.01 billion.

"Amazon.com exceeded the goal it set a year ago - to reach pro forma operating profitability during the quarter - by delivering not only a pro forma operating profit, but also a pro forma net profit, which includes net interest expense," the company said.

For all of last year, Amazon.com generated $3.12 billion in sales, up 13 percent from 2000. Operating cash flow improved 42 percent to $349 million in fourth quarter 2001, a $101 million increase.

©MMII, CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report