Amazon creeps slightly closer to profit

Internet giant Amazon.com crept slightly closer to the Holy Grail of profitability yesterday after it announced its losses were shrinking.

The e-tailer - the unofficial bellwether of e-tailers worldwide - reported losses of $58m for its second quarter, down from $116m in the same period last year and considerably better than Wall Street's estimates of $80m.

Revenues were up 16 per cent to $668m from the same period last year, but down from $700m in the previous quarter.

Despite claiming that sales for the year would be lower than expected, Amazon CFO Warren Jenson said the company was on track to achieve "pro-forma" profitability for the fourth quarter of this year. Amazon chief executive Jeff Bezos laid the blame for the loss-making quarter on disappointing European sales and claimed the company's US operation had made an "underlying profit".

In separate news, Bezos announced that media goliath AOL Time Warner has invested $100m in a four-year deal with the company.

As part of the marketing deal, AOL's shopping site Shop@AOL will receive access to Amazon's personalisation and search technology from late 2002. In return, Amazon will promote AOL's products and services on its site, the Financial Times reports.

Amazon CFO Jenson said the AOL investment meant the company would reach its target of finishing the financial year with $900m in cash, despite reduced Q4 sales estimates.