Amazon May Say Profit Increased on Overseas Sales, Electronics

By Heather Burke

July 23 (Bloomberg) -- Amazon.com, the world's largest Internet retailer, may say profit rose as online shoppers bought more flat-screen televisions and video-game players and a weaker dollar boosted overseas sales.

Second-quarter net income may have risen 43 percent to $111.6 million, or 26 cents a share, the average estimate of 15 analysts in a Bloomberg survey. A year earlier, Seattle-based Amazon had net income of $78 million, or 19 cents.

Sales of electronics, jewelry and baby clothes have outpaced those of books and CDs, Amazon's original wares, as Chief Executive Office Jeff Bezos adds new categories, and international revenue has grown faster than U.S. sales.

``Amazon.com has historically been known for media, but they're not tied to media,'' Scott Tilghman, an analyst at Soleil Securities Corp., said yesterday in an interview. ``You want to have what the customer is looking for in a one-stop shop.''

The dollar's decline boosted the value of Amazon.com's overseas sales when translated into the U.S. currency. The dollar dropped 12 percent against a basket of six foreign currencies during the quarter. International sales accounted for 45 percent of Amazon.com's revenue last year.

The company reports second-quarter results today after the close of U.S. markets.

Bezos, 44, wasn't available for an interview, Amazon.com spokeswoman Patty Smith said in an e-mail yesterday.

In April the company forecast second-quarter sales of $3.88 billion to $4.08 billion and operating income of as much as $160 million. The average revenue estimate of 18 analysts is $3.96 billion.

Power Tools, Fabric

Amazon is benefiting from more rapid growth of Internet sales compared with total sales. Sales by online merchants increased 14 percent in the first quarter from a year earlier, compared with a 2.8 percent gain overall, according to the Commerce Department. Second-quarter data will be released next month.

Amazon fell 51 cents to $67.97 yesterday in Nasdaq Stock Market trading. The stock has dropped 27 percent this year after more than doubling in 2007.

The company now sells products in more than three dozen categories ranging from power tools to musical instruments. Last month Amazon opened an office supplies Web store and bought Fabric.com, which sells cloth and sewing tools.

Amazon's Kindle electronic reading device might have accounted for as much as 2 percent of revenue in the quarter, estimates Baltimore-based Tilghman. He recommends buying Amazon shares and doesn't own any. Amazon has declined to release sales figures for the Kindle.

The company also has expanded sales of digital movies and music, where it ranks second behind Apple Inc.'s iTunes, according to market researcher NPD Group in Port Washington, New York.

Digital downloads are ``a large untapped market with a lot of upside potential,'' Jeffrey Lindsay, an analyst at Sanford C. Bernstein & Co. in New York, said yesterday in an interview. He recommends buying Amazon shares and doesn't own any.

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net.