"Work is of two kinds: first, altering the position of matter at or near the earth's surface relative to other matter; second, telling other people to do so." -- Bertrand Russell

BREAKFAST WITH THE FOOL
Amazon's Elusive Billion-Dollar Quarter

	Format for printing Reuse/Reprint

By Rick Aristotle Munarriz (TMF Edible)
January 9, 2001

Amazon.com (Nasdaq: AMZN) is still the king of the e-tail hill. The company released preliminary fourth-quarter results that found sales climbing by more than 40% to at least $960 million. The fiscal showing did miss the magical billion-dollar mark some analysts had been hoping for. However, the results fell within the range of company projections.

First reaction? Relief. The stock inched up in after-hours trading yesterday (though it headed lower this morning). While no one expected an eToys (Nasdaq: ETYS) redux -- eToys announced last month that holiday sales would come in at half of its internal targets -- Wall Street always savors the opportunity to exhale during these nervous market times.

The Rule Breaker Portfolio's Brian Lund was impressed with the company's inventory and cash levels. Paul Larson, who covers the company for Motley Fool Research, was impressed with the company's operating margins. Despite its free shipping promotion and costly split shipments, Amazon revealed that its pro forma net operating loss would be less than 7% of its net sales. That is the leanest showing in the company's publicly traded history.

That implies an operating loss of no more than $67 million. How well the company fares in net interest expense and other lines items below that will dictate whether the company falls at, above, or below the $0.26 a share consensus shortcoming estimate.

With 4 million new customers added during the quarter -- and average orders spiking to $58 a pop on the strength of its electronics store and its $100 minimum for free shipping promo offer -- it wasn't a blue Christmas for Amazon after all. As a matter of fact, it wasn't much of a red one either.

News to Go

Leading mobile phone maker Nokia (NYSE: NOK) has traveled outside of its calling area. The Finnish wireless giant reported that it sold 128 million cell phones last year. That heady handset growth -- up 64% on a volume basis over 1999's level -- meant more market share for the company. However, commanding 31.6% of the 405 million wireless phones sold in 2000 still fell short of some analyst expectations.

Terrible I2 (Nasdaq: ITWO)? Not today. The B2B supply-chain software specialist reported that fourth-quarter sales and operating income would top analyst expectations. It comes on the heels of similar outperformance announced yesterday by leading business management software maker SAP (NYSE: SAP). Is B2B the place to be? The jury's still out but it appears that even in light of an economic slowdown, companies will still spend money to make money -- especially on efficiency-enhancing software.

Grounded. UBS Warburg is downgrading many fliers in the airline sector this morning. American Airlines parent AMR (NYSE: AMR) leads the way. Following yesterday's announced acquisition of fellow airline Trans World Airlines (NYSE: TWA), Moody's cut the company's credit rating while Standard & Poor's has it under review. Although sector consolidation is often a sign of industry strength, it appears that the airline sector's fundamentals have shifted during the flight.

Check out yesterday's Foolish market wrap-up with just one click.

Editors' Pick

Richard McCaffery shares some tools that help screen out companies trading at unrealistic values.