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Amazon '99 sales triple
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January 5, 2000: 1:21 p.m. ET
Strong holiday season pushes year's sales to $2.6B, but loss still expected
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NEW YORK (CNNfn) - A strong surge in holiday sales helped Amazon.com more than double its 1999 fourth-quarter revenues, but the online retailer warned Wednesday the increase would do little to improve its bottom line.
The Seattle-based company, rated by many as the top Internet shopping venue during the 1999 holiday season, said it posted revenue of $650 million during the recently completed fourth quarter.
That tally not only marked a 157 percent increase over the $253 million in revenues Amazon.com generated during the comparable quarter last year, it eclipsed the company's entire 1998 sales tally of $610 million during the last three-month period alone.
Company officials said holiday sales were particularly brisk. Amazon.com registered more than 2.5 million new customers since Nov. 10, and recorded nearly 5.7 million unique visitors to its site each week during the holiday season.
However, company officials said the higher sales would not translate into lower net losses during the fourth quarter because of heavy investments made in the company's distribution network during the period.
"We went all-out to make sure we delivered for customers this holiday season," Warren Jenson, Amazon's chief financial officer, said.
Jenson said in addition to the added expenses, the company also expects to incur higher-than-expected inventory-related charges and writedowns related to its decision to stock up on products in its new divisions, particularly toys and electronics.
Amazon.com's (AMZN) stock fell sharply on the news, losing 10-15/16, or more than 13 percent, to 71 at midday.
Numbers don't surprise analysts
Analysts polled by research firm First Call Corp. expect Amazon to have lost 48 cents per share during the fourth quarter, far more than the 7 cents per share it lost a year earlier.
Some analysts added to the estimated losses following the announcement.
Tom Courtney, an analyst with Bank of America Securities, lowered his fourth-quarter estimate to a loss of 55 cents per share from 48 cents. But he said the investments have thus far proved worth it, particularly given Amazon.com's dominance over the online retailing industry.
"Operationally, they did quite well during the quarter," Courtney said. "The real reason for [the higher losses] is their higher costs for markdowns on the consumer side. That's their attempt to err on the side of service."
Courtney, who maintains a "market perform" rating on Amazon.com's stock, said the company is showing marketable improvement in its operations.
Not only did the fourth-quarter revenue figure far surpass Wall Street's expectation of between $575 million and $600 million, but the company's cost per acquisition and revenue from existing customers both showed noticeable improvement.
New offerings drive holiday sales
Amazon (AMZN) attributed its fourth-quarter revenue surge to the site's launch of several new retailing sections -- including home improvement, software and video games -- during November. Customer demand in those sections accounted for more than half the company's annual revenue, with U.S.-based book sales accounting for the rest.
The company's delivery performance -- 99 percent of holiday orders were shipped by Christmas -- and wider product selection have earned Amazon.com multiple accolades during the past week, including the site being named the nation's No. 1 holiday shopping venue by Ernst & Young and Media Metrix (MMXI).
But it also generated higher costs as the company stocked up on inventory to ensure it could meet the surge in demand.
"I think this company will do a better job of inventory management as these businesses mature," Courtney said. "Remember, they've only been in some of them for six months or so."
Still, the company's shares have slumped along with those of other Internet retailers in recent weeks as investors grew concerned about their inability to meet holiday shipping deadlines.
Including Wednesday's trading, Amazon.com's shares had lost more than a third of their value since closing at 106-11/16 on Dec. 10.
Analysts said investors are becoming more short-sighted in their expectations for Amazon.com, particularly given growing market concerns about the technology sector being overvalued. 
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