"There (are) never any guarantees, but we are very confident in our fourth-quarter operating profit goal," Bezos told analysts gathered at a conference here Tuesday. "We still have a lot of work to do, but we feel very good about it."
The pro forma profit would exclude a range of costs, such as interest on Amazon's more than US$2 billion in debt and charges associated with acquisitions. Amazon, which has never turned a profit, has been under intense pressure during the past year from investors and analysts. The stock closed Tuesday down 47 cents at $16.44, off more than 70 percent from its 52-week high of $56.25.
Although some analysts have praised the company's goal of reaching a pro forma profit, others have questioned using pro forma numbers and have urged Amazon to give more information on its real bottom line. Asked when Amazon would post a real profit, Bezos said, "we haven't given any guidance on that yet."
Jeetil Patel of Deutsche Bank Alex Brown said the presentation showed Amazon is on the right path but has a ways to go.
"Their show was detailed about what they have to do in the next 12 to 16 months to hit breakeven," said Jeetil Patel of Deutsche Bank Alex Brown. "They are doing well with their bottom line, but the top line is where the opportunity is to improve their growth rate."
Amazon announced that during the second half of the year it will begin selling personal computers and will open a book store dedicated to business and institutional customers. Amazon plans to tie the PC store in with its existing electronics store.
Amazon on Wednesday will also begin to bundle products to encourage customers to buy more items. The program--which will typically pair a hot-selling product such as the movie "Gladiator" with an older title, such as "Spartacus"--offers consumers a discount if they buy the products together. Amazon will begin the initiative in its DVD department, but plans to expand it to other stores in the near future.
"This takes our average order size up," said David Risher, Amazon's senior vice president in charge of marketing and merchandising.
International markets
Amazon said it also expects continued growth overseas, although it does not necessarily plan to continue its program of launching standalone Web sites on a country-by-country basis. Instead, Amazon plans to focus its global expansion on expanding the type of products it offers through each of its four overseas stores based in the United Kingdom, Germany, France and Japan.
For instance, the company recently began selling consumer electronics through its United Kingdom site and video games and software through its French store.
The company said it expects its international operations to close the year with anything from a pro forma operating loss of 2 percent of net sales to a profit of 2 percent of net sales for the fourth quarter.
With its four international stores, Amazon now reaches a market that comprised 92 percent of consumer e-commerce revenue in 2000. Consequently, the company will be careful with any future expansions overseas and would likely grow through an extension of its current sites, said Diego Piancentini, senior vice president and general manager of Amazon's international operations.
"The international land rush is over," Piancentini said. "We can take more time to enter future international markets."
