AMAZON.COM PROFIT REPORT TO BE RELEASED TUESDAY

SEATTLE -- Amazon.com has made many groundbreaking moves in thescant six years it's been in business.

Now it's going for another first making money.

The world's largest Internet retailer has said it aims to turn apro forma operating profit in the fourth quarter ended Dec. 31. Itreports earnings Tuesday.

That measure of profit excludes many expenses and is a long wayaway from true profitability analysts are still predicting thecompany will report a net loss of millions of dollars, and Amazonhas not said when it expects to turn a net profit.

But Amazon executives and financial experts still say thatmeeting that pro forma operating profit target is critical.

"Investors are looking for some sort of proof that the economicsof e-retailing or e-commerce make sense, and this is the milestonequarter for them," said Jeetil Patel, an analyst with Deutsche BancAlex. Brown in San Francisco.

It's also an important test of Amazon executives' credibilitywith Wall Street, said hedge fund manager Scott Reamer of Union TreeCapital Research in Denver.

"It's a psychological milestone for the Street if only because itwas the one achievable thing that management set out to do earlierthis year," Reamer said.

But, Reamer cautions, "It's not a real profit and they've got alot of debt. There's a long way from here and actual reportedearnings."

Reamer thinks Amazon will likely meet the goal; Patel isconfident the company will outdo itself.

Earlier this month, Patel said he thought Amazon would actuallydo better than expected in the fourth quarter, based on faster-than-expected growth in the company's international divisions and strongholiday sales. He is predicting a $15 million pro forma operatingprofit.

Amazon has not given specific financial guidance on its holidaysales, although the company warned in its third quarter earningscall that it expected sales would be flat or grow by at most 10percent in the fourth quarter, compared to the same period lastyear.

Nevertheless, analysts say the world's largest online retailercouldn't help but benefit from strong overall online sales. Amazonwas the seventh most visited Web property on the Internet inDecember, according to figures released Friday by Jupiter MediaMetrix.

Most analysts reported that online sales were up considerably in2001, despite the general economic downturn.

This week, the analyst group comScore estimated that sales atdomestic online retailers reached $33.7 billion this year, excludingonline travel. That's a 20 percent increase over 2000 sales.

ComScore, based in Reston, Va., said those numbers were boostedconsiderably by strong holiday sales. During the weekend of Dec. 15-16 alone, the firm estimates that people spent $341.1 milliononline.

Patel also praises Amazon for taking strong steps to cut extraexpenses, something it vowed to do last year when it cut 1,300workers and announced the profitability target.

While most analysts believe the company will meet its fourth-quarter profit target, some have been more skeptical about Amazon'slong-term prospects.

They've noted that Amazon has seen a remarkable slowdown in salesin its core business of books, music and movies. Sales in thatsector fell by 12 percent in the third quarter compared with thesame period last year.