Red Ink Less than Expected

FRAMINGHAM (04/27/2000) - Analysts seem to have shrugged off Inc.'s announcement yesterday that the company saw a first-quarter loss of more than $300 million while net sales surpassed $570 million.

The $308 million loss, which was less than Wall Street observers expected, translated into a diluted loss per share of 90 cents and surpassed the $61.7 million loss posted for the first quarter of 1999.

However, many analysts expected the online bookseller to lose even more money, leaving many viewing the company's announcement as good news.

While First Union Securities downgraded Amazon from a Buy to a Hold position, Prudential Securities upgraded the online retailer from a Hold position to a Strong Buy. And a report released by Morgan Stanley Dean Witter analyst Mary Meeker termed the Amazon news as moving in the right direction.

Meeker's report said Amazon "reported solid results for 1Q (2000)." She wrote, "The company had strong metrics and improved its customer value."

Amazon said its net sales of $574 million represented a 95 percent increase over the 1999 first-quarter mark of $294 million.

Meeker wrote that she sees Amazon as the leading Web retail platform and that the company has yet to reach its true potential.

"In our view, it has a big market opportunity, and its effect of scale are largely untapped," Meeker said. "Amazon logged 3.1 million new customers, a rise that topped our estimate of 2.2 million and brought the total to 20 million. Its sales per customer increased to $121 from $116 sequentially, and its related acquisition costs fell to $13 from $19."

Amazon shares were trading at $51.81 per share in mid-morning trading today, down from yesterday's close of $53.50.

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