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4/26/2005
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Amazon Earnings Drop On Tax-Related Expenses

Amazon.com reports a big drop in profits from tax-related expenses in the first quarter, as revenues increased by 24 percent.

Amazon.com Inc. on Tuesday reported a big drop in profits from tax-related expenses in the first quarter, as revenues increased by 24 percent.

The Seattle-based Internet retailer said net income for the quarter ended March 31 fell to $78 million, or 18 cents a share, from $111 million, or 26 cents a share, from the same period a year ago. Profits for the latest period were affected by $56 million in income tax expense, compared with a $2 million income tax benefit in the same period a year ago.

Net sales increased to $1.9 billion in the quarter from $1.53 billion a year ago.

Jeff Bezos, founder and chief executive of Amazon.com, said the company's revenues were helped by "especially heavy use," of the company's membership program, Amazon Prime, in purchases of electronics, tools, kitchen and health and personal care products. Amazon Prime members pay $79 a year for unlimited express shipping.

"Getting your items right away changes the way you use and think about Amazon.com," Bezos said in a statement.

For the full year, Amazon.com said it expects net sales to be between $8.2 billion and $8.7 billion, an increase of between 18 percent and 25 percent over 2004. Operating income is expected to be between $395 million and $510 million, or between a 10 percent decline and a 16 percent increase from last year.

In the second quarter, net sales are expected to increase between $1.7 billion and $1.8 billion, or an increase of 21 percent to 32 percent over the same period a year ago. Operating income is forecast to drop between 42 percent and 7 percent to between $50 million and $80 million.

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