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

AMZN 230.84

-0.7%

Dec 31 3:59 PM EST

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To: Olu Emuleomo who wrote (77887)	9/21/1999 10:50:00 AM
From: Eric Wells	Read Replies (1) of 164684

I'm amazed that in all the articles I have read on the potential impact of the new Fair Market Auction Consortium on Ebay, no one has mentioned the following issue: Even if the consortium fails miserably, the formation and announcement of the consortium is likely to put negative pressure on Ebay net income in the short term (6-12 months). Why? In deciding how to react to the consortium, Ebay can either do nothing (which is very risky) or spend more dollars on marketing - which might lead to a decrease in net income. A decrease in net income in itself might cause Ebay's stock to go down, even if investors are exceedingly optimistic about Ebay's prospects (what will be the reaction if Ebay suddenly sustains a loss during one of the coming quarters?). The worst thing Ebay can do is assume that the consortium is no threat at all. That's the way Lotus viewed the competition in the early 90's. I see Ebay is back up this morning. Thanks, -Eric

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