Jeff Bezos insists he is making tough business decisions

A year ago Amazon announced 150 job cuts and revealed losses of $185m, despite a 150% increase in pre-Christmas sales.

And things did not get much better during the following months. In the year 2000, investors did not see profits, but losses of more than $90m (�60m).

This year, 1,300 jobs will go less than a month after the company once again reported record sales during the last few months of the year.

And, again, company officials say they will reach profitability before the end of the year.

But this year's predictions are less ambitious; "pro forma operating profitability" will be reached by the end of 2001, the company predicts.

That is; not real profits, but profits minus some potential losses once investments or employee stock options are taken into account.

Slow growth

"I think the lay-offs are just symptomatic of the fact that they are not growing as fast as they thought they would," said Ragen MacKenzie analyst Allyson Rodgers.

The pace of growth has slowed for most online businesses, but not as fast as the slowdown in expectations.

It may seem incredible, but analysts appear to be disappointed with Amazon's 44% growth in sales during the last three months of 2000 to just less than $1bn.

Even though the figure was actually higher than recent predictions made by both Wall Street analysts and Amazon itself.

The company has also slashed its losses per share by more than half, from 55 to 25 cents and if this trend continues, Amazon may well end up in the black despite sceptics' concerns.

Profit target

Amazon's need to reach profitability, however, has forced it to cut back on its ambitions.

Steve Frazier says Amazon's international expansion continues

Some of its product lines have not taken off and have been abolished.

Amazon's online partner, the home furnishing firm living.com. went bust in 2000.

And the car seller greenlight.com has been forced to scale down its business.

Steve Frazier, the managing director of Amazon UK, acknowledged that the roll-out of some product lines will be slower than planned.

But he insisted the company's expansion will continue - both in the United States, Europe and Japan.

Amazon will not need to do what the online toy shop etoys recently did.

It closed down its rapidly growing, but loss-making European operations in a desperate attempt to conserve cash.

Amazon has instead announced clear strategies and predictions for its cash reserve management to allay fears that a cash-flow problem could bring it to its knees.

Cash pile

During last year's dot.com crash, some industry analysts had predicted that Amazon could run out of money before turning a profit.

The firm denied it then, and even more strongly denies it now.

Amazon's cash plan for 2001 is clear, the company insists.

Paying for Christmas stock will bring down the cash pile from $1.1bn at the end of 2000 to about $650m in March.

During the rest of the year it is expected to build up to about $900m.

'First mover, good mover'

Amazon has been one of the pioneers of the e-commerce world, and fans of the firm has said that this "first mover" advantage will be one of the biggest strengths in the online marketplace.

Mr Frazier acknowledges that this has helped the company, especially in some of its international markets - Germany and Britain - where it set up shop more than two years ago.

The firm's founder Jeff Bezos has maintained that its core bookselling operation moved into profit last year.

But its overall performance has remained loss making as it invests in new areas and products as part of its 'land grab' strategy.

The strategy is to secure a large slab of the global etail market as it evolves.

The idea is that this large share of the market can then be converted into profits in years to come.

This principle lay behind the high spending of numerous consumer dot.com business which have now run out of money.

Unlike them, Amazon has the advantage of being the world's best known pure internet etailer and also having built up a cash pile.

But the question remains: when will it turn those advantages and huge customer numbers into hard profit?