When Amazon.com Inc. Chief Executive Jeffrey P. Bezos proclaimed a year ago that the money-losing online retailer would finally earn its first operating profit by now, almost nobody believed him. Instead, investors kept hitting the sell button, knocking the stock down 40%, to around $10. Oops. On Jan. 22, the same day traditional retailer Kmart Corp. filed for bankruptcy protection, upstart Amazon shocked everyone by reporting not just an operating profit of $59 million but also a net profit of $5 million in the fourth quarter―no ifs, ands, or pro formas. Investors piled back in, sending the stock up 24%, to $12.60. Crows Bezos: "It's a major turning point for us." The bubbly CEO may be a perennial optimist, but he's not exaggerating. Granted, the surprise net profit came partly because of a $16 million gain on foreign currency exchange, which might not happen again. And Amazon's net will lapse back into the red this quarter as holiday merchandise bills come due. Yet with operating profits more than 10 times expectations last quarter, there's no question the e-commerce bellwether hit a big milestone. Throwing off a recent slump in sales, which were flat in the third quarter, it hiked the top line by 15%, or triple analysts' expectations, to $1.1 billion. Even more important, it earned a profit by getting the basics right: tangible operational efficiencies, heads-down cost-cutting, and savvy partnership deals with the likes of Toys 'R' Us Inc. and Target Corp. "Amazon is just a much more experienced retailer now," says analyst Safa Rashtchy of U. S. Bancorp Piper Jaffray. "They're finally going to see some benefit from that."
展开▼
