Amazon sees Q2 loss widen, but beats expectations

Amazon.com has reported a loss for its second fiscal quarter of $US89 million, substantially greater than last year but better than analysts had expected.

          Amazon.com has reported a loss for its second fiscal quarter of $US89 million, substantially greater than last year but better than analysts had expected.

          Net sales for the quarter, which ended June 30, increased 84% to $578 million, helped along by the speedy growth of Amazon.com's online stores in the U.K. and Germany, the company said in a statement.

          Losses per share for the online retailer were 33 cents, up from a loss of 26 cents per share in the second quarter of 1999. Financial analysts had been expecting a loss of 35 cents a share, according to a consensus estimate from 30 brokers polled by First Call/Thomson Financial.

          Amazon.com's US books, music and DVD/Video segment finished the quarter with a pro forma operating profit of $10 million, the company said.

          Amazon.com has sacrificed profitability in favor of an aggressive strategy to expand its operations outside of the U.S. and broaden its product offerings. The company expects that financial model to continue through the fourth fiscal quarter, although its losses will narrow to single digits as a percentage of total sales, Warren Jenson, Amazon.com's chief financial officer, said in the statement.

          The company finished the quarter with a cash balance of $908 million, a figure that should rise to $1 billion by the end of the year, Jenson added.

          Sales outside of the US, including exports from the U.S., accounted for 23% of the second-quarter sales. The company's online stores in Germany and the U.K. combined accounted for $73 million, up 134% from the same period a year ago, Amazon said.

          The company celebrated its five-year anniversary this month, and has served more than 23 million customers since it went into business. It continued to diversify its offerings during the quarter by opening the Amazon Kitchen in the US, an extension to its online store that sells culinary equipment.

          Not everything at Amazon is rosy, however. Earlier this week the company said that Joseph Galli Jr., its president and CEO is leaving the company after just 13 months in the job to become chief executive officer of VerticalNet, a Web site serving business-to-business markets.

          Amazon.com, in Seattle, Washington, can be reached at http://www.amazon.com.

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