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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 233.05

+2.9%

Jan 5 3:59 PM EST

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To: Ron Kline who wrote (995)	12/13/1997 10:09:00 AM
From: Andreas Helke	of 164684

If you take a look at the overvalued stocks of 1996 they had similar characteristics. They went up in good days and refused to go down in bad days and thus reached absurd valuation ratios with PEs beyond 100. Some examples in the networking sector were Fore, Cascade and Ascend. All of them did very poorly in 1997. Ascend went down from $80 to $22 and Cascade went down even more. One important difference was that those network stocks had positive and fast growing earnings. The stock prices collopsed when the earnings growth slowed down. Amazon is not expected to earn money for some time therefore it is for now immune to earnings growth reductions. I think that the Amazon price will collapse when investors see that Amazons earnings when they finally will be positive wont achieve todays wild expactations. Andreas

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