Amazon beats the forecasts

SHARES in Amazon.com rose more than a dollar in pre-Wall Street trading today after the online bookseller's first-quarter results were much better than expected. Although the world's largest e-tailer swung back into losses after making its first profit in the Christmas quarter, the loss was much less than analysts had forecast.

It also boosted its forecasts for the full year, saying that sales should rise by at least 15% and pro-forma operating income should be more than $100m (£69m). The net loss for the three months to the end of March dropped from $234m to $23m, or from 66 cents a share to six cents.

The group has slashed costs over the past year, partly through firing 1,500 workers in the US. It extended its price-cutting policy, taking its guaranteed discount of at least 30% down from books costing $20 to those costing $15. It also said its policy of not charging for shipping in the US on orders worth more than $99 helped boost first-quarter revenues by 21% to $847m.

Chief executive and founder Jeff Bezos said: 'We said we're the type of retailer that relentlessly works to lower prices for customers, but we didn't expect to be able to do it again so soon.'

UK customers must wait for such radical price-cutting - but it was here, and Germany, France and Japan that proved the fastest growing parts of Amazon in the first quarter. Sales from the international business soared 71% to $226m and operating losses fell by 67% to $11m. Add in sales from the US site to customers outside the States, and international revenues were more than a third of the total.

Emphasising the switch from traditional dotcom cash burn to positive cashflow, UK chief Robin Terrell said: 'We are still on target for 50% of the business to come from outside the United States by 2005.'

He also justified the lack of free postage and packing in the UK with unexpected praise for Consignia, or the Royal Mail. He said: 'The first-class mail service in this country is far better than in either the US or France.'

The UK and German websites are three years old and continued their break-even position from the Christmas quarter into the first one. France and Japan are younger websites which still incur start-up costs.

Last year the group took 65,000 pre-orders for Harry Potter and the Goblet of Fire. It reckons to double that number at least on the latest book, Phoenix.