27 July 2000 yesterday unveiled second quarter results which underperformed its own expectations.

Despite revenues of $578 million – up 84% on the same period last year – they fell short of the company’s own forecast of 90% growth, and only marginally topped Q1 sales of $574m. Net losses at $317 million, however, were less horrendous than expected, albeit by only a tad.

Analysts had warned in advance of the latest figures that strong sales growth was a critical factor in Amazon's progress to profitability. According to Sara Farley of Paine Webber: "It has to be a volume story. If they are not going to get the volumes up, they are not going to get the margins necessary to sustain their operation."

However, Amazon founder and chief executive Jeff Bezos circled around Ms Farley’s point: “We really have the company unified around the theme of trying to grow gross profit, which we think is a more important metric than gross sales," he said.

Declaring himself happy with the sales growth, Bezos said: "I challenge you to find a multi-billion dollar retailer growing at 84% year over year." He was "very confident" about Amazon's cash position, although he would not rule out a return to the capital markets.

Mr Bezos also played down the resignation earlier this week of Amazon president Joseph Galli, who quit to join business-to-business web company VerticalNet as president and chief executive. "I believe he is making the right decision for him and his family circumstances," said Bezos.

News sources: Financial Times / BBC Online Business News (UK)