"The fact is, the weak euro–which lowered Amazon’s interest payments on its debt by a full $16 million–accounted for a good bit of the company’s surprise performance, rather than stellar operating margins or the triumph of the kitchen appliance business. Without this gain, as Amazon openly acknowledged in its earnings release, the company would have posted a net loss of $11 million."
Indeed. From Amazon.com’s latest 10K: "We may be adversely affected by foreign currency exchange rate risk. Our 6.875% Convertible Subordinated Notes due 2010 ( 6.875% PEACS ) are denominated in Euros, not U.S. dollars, and the exchange ratio between the Euro and the U.S.dollar is not fixed by the indenture governing the 6.875% PEACS."
02/21/04 update: with the steep decline of the dollar, this is still interesting to follow up. Of course in the short term Amazon is making more dollars out of its European sales, but they’re also paying more interests on that debt, plus they stopped their currency swap so they’re exposed to more volatility. I guess they know what they’re doing, I’m out of my depth here. See their 2003-09-30 10-Q.