Strong sales boost Amazon in Q4 reported fourth-quarter 2002 results that came up on top of analyst expectations Thursday, thanks to strong holiday sales, steady traffic and increased sales in international markets.

The online retailer reported net income of $2.6 million, or $0.01 a share on revenue of $1.42 billion for the quarter ended December 31, 2002. This compares to a net income of $5 million, or $0.01 a share, on revenue of $1.15 billion for the fourth quarter of 2001.

Pro forma net profit for the quarter, which includes some interest expense, landed at $75 million, or $0.19 a share, compared with $35 million, or $0.09 a share for the year-ago period. Analysts polled by Thomson First Call predicted pro forma profits of $0.14 per share on revenue of $1.39 billion.

For the full fiscal year 2002, the company reported operating income of $64 million on revenues of $3.9 billion.

The increased sales were led by third-party transactions, international sales, and a strong holiday season, the company said.

Amazon said that it had its busiest holiday shopping season ever during the quarter, with more than 56 million items ordered from Nov. 1 to Dec. 23.

International segment sales from the company's U.K., German, French and Japanese sites grew 76 percent in the fourth quarter to $461 million. Additionally, book, music, DVD and video sales grew 13 percent to $606 million during the quarter.

Although other online retailers have been hurt by consecutive blows from the sluggish economy, Amazon pins its continued popularity on its price-cutting policy and free shipping offers.

"Lower prices drove results this quarter," Amazon Founder and Chief Executive Officer (CEO) Jeff Bezos said in a conference call Thursday. Bezos added that the company has cut prices five times in the last 18 months.

Due to its rosy fourth-quarter results, the company said Thursday that it would make its free shipping offer on orders over $25 a full-time, year-round offering.

"Even though Super Saver shipping is expensive for Amazon, it's the right decision to make for our customers and stockholders," Bezos said.

Looking ahead, the company said it plans to continue to lower prices and expand its product offerings. The company recently launched an apparel store, which so far has experienced brisk sales, Bezos said.

"Our long-term strategy remains the same: an obsessive focus on customers," Bezos added.

The company also predicted that pro forma profits for the first quarter of 2003 would total between $5 million and $20 million on revenues of between $1.02 billion and $1.07 billion.

For the full year 2003, Amazon said that revenues are expected to grow 15 percent and pro forma net profit is expected to be over $115 million, or over $0.27 a share.

Shares of the Seattle, Washington company (AMZN) closed up 2.93 percent to $21.79 Thursday before the results were released.

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