January 28, 2004, 12:00 AM

Amazon posts first full-year net profit of $35 million; sales up 36%

Amazon posted its first full-year net profit of $35 million last year with a fourth-quarter boost of $73 million. Net sales for the year rose 36% to $5.3 billion. CEO Jeff Bezos thanks free-shipping, low prices and an expanded product line.

Paul Demery

Managing Editor, B2B E-commerce

As it continued to break out last year with new products and services, Amazon.com Inc. posted its first full-year net profit in 2003 of $35 million on net sales of $5.3 billion, compared to a net loss of $149 million on $3.9 billion in net sales in 2002. CEO and founder Jeff Bezos attributes Amazon’s performance largely to its free-shipping, low prices and an expanded product line.

"Our commitment to year-round free shipping and lower prices continues to be a win-win for our customers and Amazon.com," Bezos said. "In addition to purchasing thousands of $29 DVD players this holiday season, customers also bought Tibetan yak cheese, pomegranate molasses and zero-carb cheese straws."

Amazon said it also posted record free cash flow of $346 million last year, up 156% from $135 million in 2002. Full-year operating income rose more than 300% in 2003, to $271 million from $64 million in 2002. Q4 operating income rose 94% year-to-year to $138 million from $71 million.

Q4 net sales were $1.9 billion, up 36% from $1.4 billion in the year-ago period, while Q4 net income climbed more than 2,000% year-to-year, to $73 million from $3 million. Amazon`s Q4 and fiscal year ended Dec. 31.

Amazon increased its product selection in 2003 by adding more than 40,000 unique gourmet food items, more than 60,000 unique jewelry items, and more than 70,000 unique health and personal care items.

It said Q1 2004 net sales are expected to be between $1.39 billion and $1.49 billion, or grow between 28% and 38%, compared with first quarter 2003. 2004 net sales are expected to be between $6.20 billion and $6.70 billion, rising between 17% and 26% from $5.3 billion in 2003.

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