Amazon's New Chapter

It's not January. That's the first thing one has to realize after Amazon (Nasdaq: AMZN  ) posted a net profit on sales north of $1 billion last night. No snow to shovel. No New Year's resolutions to dismantle. This isn't the world's leading online retailer posting its seasonally potent December quarter results three months early. It's happening now after the traditionally dreary September period.

With third-quarter revenue soaring by 33% to $1.1 billion and a modest $0.04-a-share profit, Amazon not only produced its first profitable quarter outside of the holiday shopping season, it has also arrived.

Then again, that last point may not be news. The stock has appreciated sixfold over the past two years. Along the way to its heady gains, it was also smartly singled out in our Motley Fool Stock Advisor. Amazon has been one of the market's biggest winners since being left for dead.

When the company adopted its everyday free shipping policy, cynics scoffed at the notion that the money-losing online retailer would -- ha, ha -- make it up in volume. But by encouraging larger orders to meet the free shipping threshold and adding storefronts with higher-priced ticket items, it was Amazon that had the last laugh.

Such retailers as Target (NYSE: TGT  ) , Toys "R" Us (NYSE: TOY  ) , and Office Depot (NYSE: ODP  ) already know this. They have Amazon run their online stores.

Naturally, the current quarter will be even more amazing. Amazon expects to ring up sales between $1.76 billion and $1.91 billion in the fourth quarter with double-digit top-line growth come 2004.

As for the short sellers who have been spanked badly by the rising stock over the past few quarters, don't worry. They'll make it up in trading volume.

Impressed by Amazon's third-quarter showing, or are you still a skeptic? What will it take to slow Amazon down? Can the bricks-and-mortar chains compete? All this and more -- in the Amazon discussion board. Only on Fool.com.


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