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The Honolulu Advertiser
Posted on: Sunday, June 10, 2001

Amazon's Bezos keeps the faith

Associated Press

SEATTLE — There was a time when it seemed Jeff Bezos could do no wrong.

Jeff Bezos, beleaguered Amazon.com CEO, laid off 15 percent of his work force since January to help reach operating profitability.

Associated Press

That was back in the heady days of 1999, when anything that ended with ".com" seemed like a good idea, and Bezos — Amazon.com's founder and the undisputed poster boy of the New Economy — had just been named Time's Person of the Year.

Two years later, Bezos's gamble on Internet-based commerce has taken him and his company on a wild ride.

The Internet boom has gone bust and Seattle-based Amazon.com, now the largest online retailer, has so far survived layoffs and a bruising stock plunge.

The company's gregarious leader, still arguably the biggest celebrity in cyberbusiness, faces a growing list of naysayers, shareholder lawsuits and a Securities and Exchange Commission inquiry into his own stock sales.

And yet, when Bezos walks down the halls of his earthquake-damaged headquarters, you can still hear his signature barking, crackling laugh several rooms away.

He's still a believer.

"I love my job," he says with a whoop, "and I have for six years. I think people believe that the last year must have been a difficult one, and certainly in the stock market it was."

Bezos, 37, contends 1999 was the weird year, and that things are more normal now.

"If you look at the six years that we've been in business, there was only one year that we weren't the underdog, and that was 1999," he says. "We're sort of accustomed to being the underdog."

Then comes another big, barking laugh.

Those who have worked with him for years say Bezos is unchanged in his immense enthusiasm for his company and its goals.

"He's definitely stayed the same person," says Jason Kilar, Amazon's vice president of books, music and video, who has known Bezos for 4 1/2 years. "He's very self-deprecating, he loves 'Austin Powers,' he's very frugal-minded and he still only has two styles of pants."

Besides Bezos' signature khakis and button-downs, the founder of Amazon.com also still snaps a daily picture as a kind of ongoing historical record.

And although his Amazon holdings are valued at more than $ 1.5 billion, on a recent trip to Las Vegas he confessed not only to playing the low-rent $5 craps tables but to asking the dealer, "Can we get a cheaper table?"

But there are changes.

Where he once talked about nothing more than "get big fast," now he says it's time to focus on the "operating efficiency side."

The company that once proudly refused to say when it would make money is now trying to reaching pro forma operating profitability — profitability that excludes costs such as stock options and losses from investments — by this year's fourth quarter.

To do that, Bezos has laid off hundreds of workers — since January the work force is down 15 percent to some 7,200 employees — and closed a customer service center and a distribution center.

He says he doesn't regret the decision to overbuild, though it has required reductions in a work force whose exceptional loyalty was largely based on belief in, and love of, Bezos himself.

The decision to lay people off was "an incredibly personally distressing action to take, and also clearly the right business decision," Bezos says.

These days, he's also apt to stress his belief in the need to separate Amazon.com, the company, from "AMZN," the symbol of its struggling stock. He maintains that they "are really two completely separate things," and that business is better than ever in 2001, even if the stock price has fallen dramatically.

"In 1999, when the stock was booming, we had 14 million customers. In the year 2000, when the stock was busting, we had 20 million customers," he says.

And, he likes to point out, on a split-adjusted basis, Amazon stock was trading around $1.50 when the company went public four years ago and is now about $15.

Investors who didn't buy until later, and who then saw their investments dwindle away to nothing as Wall Street lost confidence in Bezos's business plan, are more skeptical.

Bezos is named in at least three federal lawsuits accusing Amazon of misleading investors by not accurately reporting investment relationships to the SEC. The complaints center on Amazon having allegedly mischaracterized as cash gains revenue based on equity investments that actually resulted in losses. The company denies any wrongdoing.

Additionally, a group of influential Wall Street analysts are demanding that Bezos and other board members release more specific information about the company's financial status.

Bezos has not responded to their repeated letters, though he defends his board and says he will be happy to answer any questions at a shareholders meeting on Wednesday.

Gary Lutin, an investment banker who helped to organize the analysts' group, isn't optimistic that Bezos will provide the information analysts seek.

"Mr. Bezos himself appears to be a brilliant person, and I would hope he would be able to apply that brilliance to the development of a viable business enterprise rather than stock promotion," Lutin says.