Stock Watch: Amazon Falls on Accounting Questions (Nasdaq: AMZN) was down 2 15/16 at 32 11/16 early Monday following an article in Barron’s magazine criticizing the way the company accounts for some revenue.

Amazon said in its third-quarter earnings report released last week that it had “received informal inquiries from the SEC staff with respect to accounting treatment and disclosures for some of its initial Amazon Commerce Network transactions.”

The company said it reviewed the transactions with its auditors and the SEC staff and “believes that the accounting treatment, and disclosures, were appropriate.” The company added that it would continue to cooperate with the SEC should further questions arise.

Amazon reported a third-quarter operating loss of $68 million, or 25 cents per share, 8 cents ahead of analysts’ expectations. Sales rose 79 percent from a year earlier, as the e-tail giant added 2.8 million new customers.

In an August filing with the SEC, Amazon said it was restructuring certain deals with partners in the Amazon Commerce Network because of the uncertain nature of e-commerce and the poor financial condition of some of the partners. Amazon asked its partners to accept lower future cash payments, revisions to agreements, or both. Analysts have criticized the company’s strategy of expanding beyond books, music and videos. Yet in the third quarter, Amazon said its electronics store passed the music division to become its second-largest sector.

Amazon also said it expects sales for 2001 to total about $4 billion, with operating losses coming in at less than 5 percent of cash.

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