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<No jaundiced survey would be complete without an Internet stock, and Tice's favorite short there is Amazon.com. The Seattle-based vendor of books and records is a great company, says Tice, that is missing just one element: "profits."
With a paper fortune in the billions, Amazon founder Jeff Bezos may not even have a proper profit motive, says Tice. Accumulated losses in Amazon's business increased sevenfold in the 15 months ended in June, reaching $64 million. Investors must have been thrilled, because over the same period, Amazon.com's stock-market capitalization increased tenfold, or $4 billion. Recently, the company announced that it won't make money in '99, either.
Tice thinks the company will be only marginally profitable, if indeed it ever has any earnings at all. Barriers to entry on the Internet are minuscule, he points out, and so is consumer loyalty. Tice notes that Web sites called 'bots allow shoppers to find the very cheapest online seller of any book or record: "This ensures that new booksellers have the opportunity to cut prices and make life miserable for everybody else."
At a recent price of 86, Amazon.com shares are cheaper than they were at 147. But they're still selling at 9 times the company's annualized per-share revenues. When investors sober up, Tice believes the stock should sell for under $10. |
