FOCUS-Amazon.com shares slide as losses mount
By Chris Stetkiewicz
SEATTLE, July 22 (Reuters) - Shares of Amazon.com Inc.
<AMZN.O> fell 13 percent on Thursday as analysts predicted the
online retailer would keep losing money as it continued to
spend heavily to expand into new businesses.
The stock fell as low as $106.56 and was down $16 at
$109.44 in early afternoon Nasdaq trading. It has now fallen
more than 50 percent from its all-time high of $221.25.
Amazon.com, the Internet's biggest retailer, on Wednesday
reported a pro forma net loss of $82.8 million, or 51 cents per
share, compared with a net loss of $17 million, or 12 cents per
share, a year earlier.
The results met Wall Street consensus forecasts, as
measured by research firm First Call Corp., and net sales
surged to $314.4 million from $116 million a year earlier.
But some analysts had quietly hoped Amazon.com, would
report better-than-expected results, having grown accustomed to
positive surprises from the fast-growing Seattle company.
"Amazon.com did not significantly exceed consensus revenue
projections for the company. Historically, they have come in
well in excess of analysts' projections," said analyst Derek
Brown of Volpe Brown Whelan & Co.
In April the company warned that its losses would increase
as it ramped up spending to acquire or invest in other
companies, and analysts said Chief Executive Jeff Bezos
repeatedly stressed that point in a conference call on
Wednesday.
Merrill Lynch analyst Henry Blodget said in a research note
that "profitability, if any, remains a next-millennium
phenomenon."
Several analysts deepened their 1999 loss-per-share
estimates, even though some predicted faster revenue growth as
a result of Amazon.com's moves to add toys and electronics to
its core online offerings of books and music.
Blodget predicted a 1999 loss of $2 per share, compared
with a previous loss estimate of $1.74.
Analysts were struck by Bezos's comments on the challenges
of plunging into several new markets at once.
"They're not saying they don't expect to be able to do it.
They're just highlighting the fact that they're undertaking a
very complex and very expansive set of challenges," Brown said.
The company in the second quarter launched an online
auction service and has spent more than $110 million on
minority stakes in online retailers including Drugstore.com,
Pets.com and HomeGrocer.com.
Amazon.com also said it would spend up to $300 million to
build warehouses in the next two years, though it plans to
finance most of that investment.
REUTERS
Rtr 21:09 07-22-99 |
