Shares of online retailer Amazon.com fell sharply this week when the company announced that despite tallying higher-than-expected sales in its fourth quarter, the added holiday-season revenues would not translate to the bottom line.
The Seattle-based marketer, which started as an Internet book seller and has since diversified its product offerings to include a wide range of other fare, said it brought in more than $650 million during the fourth quarter, compared with sales of $253 million in the 1998 fourth quarter and $610 million in all of 1998.
However, the company issued a statement saying that its “higher seasonal sales will not translate into lower net losses in the fourth quarter.”
The company, which has been famous for compiling losses almost as fast as it has been adding new product categories lost $46.43 million in the 1998 fourth quarter, en route to a loss of $124.55 million for the year. The losses for 1999 are expected to surpass those figures, as Amazon.com continues to invest heavily to provide a high level of service.
The losses for the fourth quarter of 1999 also will include inventory charges and write-downs that will be higher than had been expected, largely because the company carried a deep inventory of products in some of its newer categories, including toys and electronics.
“Consistent with our strategy, we went all-out to make sure we delivered for customers this holiday season,” said Warren Jensen, Amazon.com's chief financial officer, in a prepared statement.
The company said it invested heavily in its distribution infrastructure during the year, which helped it achieve an on-time shipping rate of “well over 99 percent” for the holidays. It also said it shipped more than 20 million items and served about 2.5 million new customers.
But investors seemed to be hoping that some of that efficiency might show up in the form of reduced losses.
The company's stock slipped more than 10 percent by mid-day on Wednesday, to just over $71, and was more than 30 percent off its 52-week high of $113. The stock also lost some value on Tuesday, when markets in general slumped, reportedly because of fears of federal interest-rate hikes and because of profit-taking by investors.
The company said it expected to report full results for the fourth quarter on Feb. 2.