Amazon.com Announces Free Cash Flow Growth

Amazon.com, Inc. (www.amazon.com) announced financial results for its third quarter ended September 30, 2004. Net sales were $1.46 billion in the third quarter, compared with $1.13 billion in third quarter 2003, an increase of 29%. Net income was $54 million in the third quarter, or $0.13 per diluted share, compared with net income of $16 million, or $0.04 per diluted share, in third quarter 2003.

"Our decision to put dollars into lower prices and free shipping instead of TV advertising continues to be embraced by customers," said Jeff Bezos, founder and CEO of Amazon.com. "Customer adoption of free shipping hit another record high this quarter."

North America segment sales, representing the Company's U.S. and Canadian sites, were $816 million, up 15% compared with third quarter 2003. Segment operating income declined $5 million to $57 million, compared with third quarter 2003.

A9.com, a subsidiary of Amazon.com, launched a search engine at www.a9.com, to make Internet search more effective. The "search engine with a memory" helps users manage and organize their search results, and discover additional information sources such as the Internet Movie Database and Amazon.com's Search Inside the Book results.

Star Wars Trilogy was the top-selling DVD worldwide, and the U.K. site received a record 85,000 pre-orders.

Amazon Web Services released Amazon E-Commerce Service 4.0, offering software developers and website owners unprecedented access to Amazon's technology platform and product data. Additionally, the Alexa Web Information Service (AWIS) gives first-ever access to the vast database of website information and usage data compiled by Alexa Internet (www.alexa.com).

Amazon.com's second U.K. fulfillment center in Scotland is fully operational and prepared to help meet holiday demand from European customers.

The Company acquired Joyo.com Limited, a British Virgin Islands Company, which operates the Joyo.com website in cooperation with Chinese subsidiaries and affiliates.

A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and will be available at least through December 31, 2004, at www.amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company's financial and operating results.

Amazon.com, a Fortune 500 company based in Seattle, opened its virtual doors on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer customers the lowest possible prices.