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Non-Tech : Borders Group (BGP)
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To: blankmind who wrote (102)1/11/1999 11:00:00 AM
From: Sam Citron  Read Replies (2) of 411
 
Blankmind,

RE: AMAZON

As you know, 10-Q reports are carefully written by lawyers to comply with SEC requirements. They have to be very conservative. Furthermore a prediction of operating losses for the foreseeable future is not quite the same as a prediction that they will never be profitable.

But I don't want to split hairs with you. You are quite right that the size of the average order is very important. Jeff (Bezos) recognized that selling bobby pins on the net would not be profitable unless he could sell lots of them at a time. The minimum order size that you can ship profitably depends on the efficiency of your distribution system.

You and I both agree, I am sure, that at the present time speculators may be a bit overenthusiastic about the prospects of certain firms that are doing e-commerce. I, in fact, shorted Amazon at 92 only a few months back, watched it fall to the seventies and covered when it got back to 92 fortunately. It is up 5-fold since.

Irrational? Probably. Who said markets are rational in the short run? But in the long run they tend to be fairly efficient. Five years ago I predicted that AOL would be dead in the water and yet they are thriving (although they are not making much money either presently). The point is that e-commerce is in its infancy and I would be hesitant to rule anything out.

SC

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