Amazon records first profitable year in its history

Online retail giant Amazon.com’s first full-year profit reflects the need for online retailers to continue investing in technology, analysts said.

The company, seen as one of the bellwethers of the e-commerce industry, posted a net profit of £19m for last year, compared with a £82m loss for 2002. Its fourth-quarter figure, including the key Christmas period, generated a net profit of £41m, Amazon.com said.

The international divisions, representing Amazon’s UK, German, French and Japanese websites, saw sales rise by 74% to £441m in the fourth quarter, compared with 2002.

Analysts said Amazon.com’s strong performance could partly be attributed to its continuing investment in IT.

Although online retailers invested heavily in technology during the dotcom boom, many have had to cut their spending in recent years, but Amazon.com has grown into an online "behemoth" because it has spent more than £500m on its IT platform, according to Forrester Research.

Much of the company's IT infrastructure, which is based on Linux, is devoted to handling millions of back-end daily operations, and to serving the 550,000 sellers sharing Amazon.com's platform.

The company is now in the throes of the next stage of its Linux adoption – moving its Oracle database servers and data warehouse to Linux boxes. Amazon.com's data warehouse is about 14Tbytes, and it needs speedy processing of several gigabytes per second of data. It uses Oracle's Real Application Clusters on Hewlett-Packard ProLiant servers and HP Modular Smart Array storage systems.

Looking ahead, Amazon raised its full-year revenue forecast to between £3.4bn and £3.6bn.