On October 24, 2002 Amazon.com announced its financial results for its third quarter ended September 30, 2002.
Free cash flow was $120 million for the trailing four quarters, compared with negative $301 million for the four quarters ended September 2001. Free cash flow includes cash outflows for interest and capital expenditures and excludes proceeds from the exercise of stock-based employee awards.
Common shares outstanding plus shares underlying stock-based employee awards totaled 430 million at September 30, 2002, a decrease of 2% compared with a year ago. Net sales were $851 million, compared with $639 million in the third quarter 2001, an increase of 33%, exceeding the Company's guidance of between $780 million and $830 million.
Amazon boosted sales by 21 percent for the quarter on aggressive price-cutting measures, and raised expectations for the rest of the year. But a change in the way the e-commerce giant manages stock options and worries of a sales slowdown due to the rate growth of the economy.
Amazon said it lost $93.6 million in the second quarter, compared with $168.4 million a year earlier.
Revenue for the quarter was $805.6 million, up from $667.6 million a year ago and at the upper end of expectations. The company's core books, music, and video business rang up $411.7 million, up from $389.7 million a year earlier, a slower growth rate than in previous quarters. Operating profit was $1 million, compared with a loss of $140 million a year ago; pro forma profit (interest expense) was $26 million, up from a $28 million pro forma loss a year ago.
Amazon also said it would begin expensing all stock options, which executives said would give it more control over employee inducement programs. However, the fiscally traditional move could impact future net income.
Jeff Bezos founder and CEO of Amazon.com said �we�ve lowered prices five time over the last 15 months, and simply put, it�s working, based on the results so far, we�ve made the decision to leave Super Saver Shipping-free on orders over $25-in place at least through the holidays.
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