It may not have been on the level of the "Dewey Defeats Truman" headline, but the guesses about Amazon.com's fortunes I made last week were amazingly wide of the mark.
To start, Santa must have been very good to Amazon. Most folks watching the company (including me) called for fourth quarter sales of around $1 billion. Sales came in $115 million higher than that. This, along with unforeseen savings in operating expenses during fourth quarter 2001, made mincemeat out of my predictions.
As a result, Amazon's bottom line showed net income of $5.1 million for the quarter, a far cry from the $340 million loss I saw. For the year, the company's net loss was $567 million, not my ballyhooed $912 million.
I can take cold comfort in having pegged the cost of sales right -- at least on a percentage basis. My guess was 75.5% during the fourth quarter It was actually 75.4%. For the full year, I said it would be 74.7% of sales. It was three-tenths of a percent lower. In both cases it represents an improvement over 2000 for Amazon. Extra foam on the lattes for the folks in Seattle.
So is Amazon out of the woods? Not by a long shot. They've turned their cards up, and underneath a few aces are some cards that aren't exactly adding to the hand.
Amazon's marketing cost per new customer nearly doubled between fourth quarter 2000 and the quarter just ended. It now stands at $14, while net sales per customer rose from $123 per new customer to $134. This isn't a problem now -- revenue is outstripping cost --but it's a metric to watch.
Furthermore, for all its austerity measures, its long-term debt increased by nearly $30 million during 2001, and now stands at just under $2.16 billion. There may be some sort of balloon payment arrangement Amazon has anticipated, but it's going to take more than one profitable quarter to remove the last nagging doubts.
So much for my glorious career as a stock prognosticator. My Super Bowl pick: Bruins in five. Before you laugh, what's yours?
To respond to the opinions in this column, please contact rlevey@primediabusiness.com.
