Amazon Shareholders Can't Revel in Holiday Spirit

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Though Amazon.com Inc. enjoyed healthy sales this holiday season, the company's shareholders had little cause for merriment as the online retailer's stock declined 11.4 percent in December.


Amazon's shares closed 2001 down 8 cents at $10.82 on Dec. 31. The company's stock did rise steadily throughout December but sputtered Dec. 24, falling 17 cents from the close of $10 on Dec. 21. It also fell more than $1 to $10.89 on Dec. 13.


Amazon said that 37.9 million items were ordered across its company-owned Web sites from Nov. 9 to Dec. 21, more than 10 million of them from its overseas Web sites.


More than 36,000 items were bought using the company's last-minute shipping option for orders placed until noon Dec. 22, Amazon said. Items hot with last-minute shoppers were magazine subscriptions, gift certificates and Circuit City purchases for in-store pickup. The online retailer has co-branded Circuit City and Target stores on its site.


Bill Curry, an Amazon.com spokesman, said online retailers were helped this holiday season by growing consumer confidence in the customer service provided online.


"In 1999, e-commerce basically imploded because merchants were unable to deliver, and that experience cast a cloud in 2000," Curry told The Wall Street Journal. "What we have seen this year is the normality of online shopping in the American psyche."


Online retail sales overall were strong this holiday season, with perks like free shipping drawing shoppers, despite the depressed U.S. economy. Holiday shoppers spent $9.6 billion online -- excluding travel and auction sales -- in the fourth quarter through Dec. 23, according to figures released Dec. 31 by comScore Networks Inc., which tracks sales at online retailers. Overall, comScore expects fourth-quarter sales to hit $10.5 billion, up 15 percent from last year and up 40 percent from the third quarter.


The biggest sales day of the holiday season was Dec. 12, when online shoppers spent $261.3 million, excluding travel and auctions. Amazon shares on Dec. 12 closed down 33 cents at $11.91.


Translating data on items ordered from Amazon during the holidays into sales is an inexact science at best, said Lauren Cooks Levitan, an analyst with Robertson Stephens. However, she noted that the online retailer is on track to sell 54 million items in the fourth quarter, up 30 percent from 41 million a year ago. Amazon reports its fourth-quarter results Jan. 22.


"In addition to its strong online retail business, we believe Amazon.com has successfully leveraged their leading brand and huge customer base to create a number of strategic partnerships, additional services to enhance the consumer shopping experience and marketing alliances," she said.


Cooks Levitan said she expects Amazon to report fourth-quarter net sales of just over $1 billion and full-year sales of more than $3 billion. However, she also forecasts a loss of $80.4 million for the quarter and $610.8 million for 2001.


"We believe Amazon's long-term outlook continues to be clouded by lackluster book/music/video growth, continued losses across electronics/tools/kitchen and international segments, possible conflicts surrounding Amazon's newer initiatives and a diminishing brand proposition," the analyst said.


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