PW: Sales, Losses Soar at Amazon.com in 1999

[ PW Home ] [ Bestsellers ] [ Subscribe ] [ Search ]

News

Sales, Losses Soar at Amazon.com in 1999
Jim Milliot and Steven M. Zeitchik -- 2/7/00
The e-retailer says that its U.S. book group had a profitable fourth quarter and losses will be reduced

Amazon.com just had a busy 10 days, during which the company announced the first layoffs in its brief history; did two more deals with Internet companies; and reported full-year results for 1999. The e-retailer's results followed a familiar pattern, with sales soaring 169%, to $1.64 billion, and its operating loss deepening to $605.7 million from $109 million last year; its net loss increased to $720 million from $124.6 million.

Amazon officials, however, gave the first indications that despite a record operating loss of $273.8 million in the fourth quarter, the company was headed toward profitability. Although the company gave no timetable for when it would break into the black, Warren Jenson, Amazon's chief financial officer, said the fourth-quarter loss was "a high watermark," and that losses will be reduced in subsequent quarters. In fact, Amazon reported that its U.S. book operation was profitable in the fourth quarter and that the company expected the division to be profitable in 2000.

Although the company did not break out segment results for the full year, it did provide a breakdown for category sales in the fourth quarter. Its U.S. book operation was the largest division, with revenues of $317 million, a 66% increase over fourth quarter 1998. The toy division was the second largest segment, with revenues of $95 million, while the music category had sales of $78 million. The DVD and video unit reported revenues of $64 million, while Amazon's international operations had sales of $71 million.

In the facts and figures department, Amazon said it had 16.9 million customer accounts at the end of 1999, a figure that is now more than 17 million.The company also said it cost $19 in marketing costs to recruit a new member and that customers spent an average of $116 at the site during the year.

Amazon Jumps into Digital Audio

Of the two deals Amazon concluded last week, the publishing-related one was with Audible.com, the provider of audio content, in which Amazon took a 5% stake. In return, Audible will receive what it describes as "deeply integrated" placement on many sections of the Amazon site. By the end of the year, Audible.com president Don Katz told PW, Amazon will offer downloadable spoken-word titles from Audible, alongside print, hardcover and other audio formats. Placement on navigational bars and other literary pages is also promised.

Audible offers thousands of titles, including periodicals such as the New York Times and the Wall Street Journal, as well as a bestseller-heavy book list. The company has said that it hopes the immediacy of downloads will make newspapers and hot book titles more audio-friendly.

Katz said that the Amazon deal was his company's next logical move. Last month, it announced that Audible files will be compatible with new digital listening devices made by Diamond, Panasonic and others. "We wanted to get ourselves out to a platform of 16 million," he explained. As for Amazon, the move marks the most ambitious direct-download book program yet. The site's promotional music efforts have been in place for about a year.

In other Amazon news, the bookseller said that it is laying off 150 employees, about 2% of its work force. No word yet on which departments are affected, but the company said that the layoffs had nothing to do with its holiday performance.

Back To News
--->