Amazon.com slips on downgrades, warning on losses
By Martin Wolk
SEATTLE, Oct 28 (Reuters) - Amazon.com Inc. <AMZN.O> fell
8 percent Thursday after the Internet retailing giant warned of
increased losses and several analysts downgraded the stock,
including one of Wall Street's best known Internet bulls.
Amazon.com was off 5-7/8 at 70-1/16 in heavy Nasdaq trading
after falling 5-5/16 Wednesday ahead of its quarterly financial
results, which were roughly in line with expectations.
But in a conference call with analysts late Wednesday,
Amazon.com Chief Executive Jeff Bezos warned that losses would
deepen this quarter even as revenues soar because the company
plans to spend heavily to lure holiday shoppers.
At least two brokerages downgraded the stock after the
news, including Merrill Lynch, where analyst Henry Blodget
expressed frustration with the frequent upward revisions in
spending and loss projections by executives of the Seattle-
based company.
"We continue to believe that Amazon will win the e-commerce
game, one day becoming a huge, profitable powerhouse," Blodget
said in a report. "At some point soon, however, we believe
investors will become as tired as we are of endless
postponement of gratification."
The downgrade by Blodget to a short-term "accumulate" from
buy was particularly significant because he has ridden to
financial world fame on the coattails of Amazon, beginning with
a nearly self-fulfilling 1998 prophecy projecting the stock
would hit $400 a share.
On average analysts now expect Amazon.com to suffer an
operating loss of 45 cents a share this quarter and a loss of
$1.11 a share next year, according to First Call/Thomson
Financial. Previously, analysts had projected a loss of 27
cents this quarter and 77 cents for next year.
At the same time analysts raised revenue estimates for this
quarter to about $550 million from about $500 million and for
next year to about 2.6 billion from about $2.3 billion.
And while three brokerages downgraded the stock, several
strongly reiterated their buy recommendations.
"It's hardly surprising that the company is expanding its
marketing spending for the fourth quarter ... although I
understand why many people are frustrated," said Chris Vroom of
Thomas Weisel Partners.
He was encouraged by positive news, including the
disclosure that Amazon.com's flagship U.S. book business is
expected to turn profitable this quarter.
"In our view it's crazy to get off this train heading into
the holiday shopping season," said Jamie Kiggen of Donaldson,
Lufkin & Jenrette. "Do you really want to bet against Amazon as
they make a massive bet on a huge Q4? We don't."
REUTERS
Rtr 22:23 10-28-99 |
