NEW YORK (CNNfn) - In a sign that Internet companies are turning the corner and getting returns on money spent building brands, online book retailer Amazon.com posted a smaller-than-expected second quarter loss Wednesday.
The good news sent Amazon.com shares briefly higher in after-hours trading before settling back.
Amazon.com reported a pro forma net loss of $15.8 million, or 33 cents a share, compared to a pro forma net loss of $6.7 million, or 16 cents a share a year ago. According to First Call, analysts had expected the company to post a pro forma loss of 40 cents a share.
Revenues skyrocketed to $115.9 million from $27.8 million in the quarter a year ago.
Amazon shares (AMZN) closed up 1-15/16 to 134 and traded as high as 134-1/2 in the after hours session before settling back.
Amazon's pro forma results excluded a one-time acquisition-related charge of $5.4 million, or 11 cents a share. The charge related to Amazon's April purchases of Internet Movie Database Ltd., Telebook Ltd. and Bookpages Ltd. Including the charges, Amazon's loss for the quarter was 44 cents a share.
All those companies offered in-depth information on movies and other forms of entertainment.
The company's customer base grew by 880,000 to more than 3.1 million by the end of the quarter. That's a 415 percent jump over the 610,000 accounts reported at the close of the second quarter last year.
Amazon also showed it is holding on to its customers, as repeat customer orders represented more than 63 percent of its business in the period.
That statistic proves the company's customer relations strategies are working, said Jeff Bezos, Amazon's chief executive officer.
"Our leadership position comes from our obsessive focus on customers. Customers want selection, ease of use and the lowest prices. These are the elements we work hard to provide," he said.
However, he said the company would continue to spend money to expand its reach.
"We continued to improve our customer experience during the quarter with the opening of our music store, our easier-to-navigate store layout, and our expansion into the local U.K. and German book markets,'' Bezos said. "These initiatives will continue to require aggressive investment and entail significant execution challenges.''
Analysts said Wednesday's results are likely to drive shares of Internet plays even higher as more people see them as a good investment.
"It just confirms that Internet stocks are making progress and that it's a slow process of going from more loss to less loss and ultimately profitability. That would indicate it's OK to continue to invest" in the companies, said Lawrence York, portfolio manager of the WWW Internet Fund.
Although Amazon is shrinking its red ink, it has yet to turn a profit and has lost more than $64 million since its inception in 1994.
In March, Amazon warned investors it expected to post substantial operating losses due to increased competition from traditional book chains and higher promotional spending.
Amazon, which bills itself as the world's largest bookstore, has watched its stock price skyrocket as investors seek to cash in on the Internet craze.
Like most Internet stocks, Amazon has continued to perform well, although it is currently off its 52-week high of 147.
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In June, the company widened its product offerings to include music. Amazon's music store offers more than 125,000 titles.