Emily's Research Section V

Research

SECTION V

TITLE: Jeff Bezos and Amazon.com: How is he Still Making Money?

TOPIC AREA: Net People and Places

To the surprise of many investors, Amazon.com, the online store that sells everything from books to computers to kitchen appliances, did not go bankrupt like its fellow dot-com businesses. Not only has the company avoided bankruptcy, but it also, for the first time in its seven-year history, made a profit during the fourth quarter of 2001. True, the profit was only a penny per share, but many analysts believe that the company may have a full year of making a profit in 2002 (1). Amazon.com has weathered the storm of the dot-com bust and if holiday sales are strong, the company will continue to turn a profit (1).

In fact, Amazon.com's stock has risen 32% this year and is the best-performing stock on the Nasdaq 100 (2). The main reason for the rise in stock: investors are gaining confidence in Bezos's business savvy. The combination of an increase in efficiency in running Amazon.com's warehouses and Bezos's creativity has played a large role in gaining the confidence of investors. For example, a switch in computer systems in 2001 largely accounts for reduction in operating costs. Instead using the expensive Sun machines for computer operations, Bezos opted for the less expensive Linux operating system (2). Also, in order to increase revenues, Bezos decided to sell used goods along side with new items and provide free shipping for orders over 49 dollars (2). This combination has proven successful for Bezos' company and exceeded expectations (2).

Furthermore, Jeff Bezos, chairman, president and CEO of Amazon.com is still one of Fortune's 40 richest people under 40 years old; only 38 years old, Bezos is worth 1.66 billion dollars (3). Not only is he still one of the richest people, but also he moved from being ranked eighth in 2001 to fourth in 2002. So far, Amazon.com has proven it could be one of the few dot-com companies that will watch its stock rise (3).

NOTES:

(1) (No author given) (2002, July 17). Chewing the Sashimi with Jeff Bezos. Business Week
Online [Online], Available: Academic Search Elite [2002, September 15].

(2) Vogelstein, Fred (2002, September 2). Amazon's Second Act. Fortune [Online], 146,
p. 186. Available: Business Source Elite [2002, September 15].

(3) Boostin, Julia, Jonah Freedman and Christopher Tkaczyk (2002, September 16).
America's 40 Richest Under 40. Fortune [Online], 146, p. 186. Available:
Academic Search Elite [2002, September 15].

WEB PAGES:

Title of Web page: amazing person.com!

Web address: www.time.com/time/poy/

Brief Description: Biography of the Time Person of the Year in 1999. Link to the Time article on Bezos from 1999 and information about Amazon.com. Includes a picture of Bezos.
Source of Web site: Time magazine

Title of Web page: Jeff Bezos

Web address: www.businessweek.com/2000/00_20/b3681008.htm

Brief Description: How Bezos is handling skepticism over his company and the dot-com bust.

Source of Web site: BusinessWeek online

Title of Web page: The fantasy world of Jeff Bezos

Web address: www.redherring.com/mag/issue83/mag-bezos-83.html

Brief Description: Background information on Amazon.com and how Bezos's optimism affects the company.

Source of Web site: Red Herring Magazine

Back To Top
Positive Comments and Suggestions