Bezos to Investors: Don't bail out
Amazon founder tells CNNfn volatility is par for course in Web business
By Staff Writer Douglas Herbert
November 04, 1999: 2:53 p.m. ET
LONDON (CNNfn) - Amazon.com founder Jeff Bezos urged investors Thursday not to abandon faith in his e-gospel of market-share-before-profits, despite deepening losses that have prompted a rash of downgrades in the electronic retailer's slumping stock.
"Internet company stocks in general are very volatile, and Amazon is definitely included in that," Bezos told CNNfn.com during a one-day visit to London Thursday.
"It's part of the territory with Internet stocks, that kind of volatility. It can be up 30 percent one month, it can be down 30 percent in a month, and a minute spent thinking about the short-term stock price is a minute wasted."
The full interview will air Thursday on CNN International's World Business Today.
In fact, Amazon's share price has shed nearly 15 percent since last Wednesday, when the world's largest online retailer revealed a near-quadrupling of its net operating loss in the third quarter to $86 million, from $24 million in the year-earlier period.
Revenue more than doubled to $356 million in the quarter ended Sept. 30, however, and the company confidently predicted "significantly higher" revenue in the fourth quarter, with its lucrative holiday season.
Meanwhile, Amazon's U.S. book division -- the mainstay of its operations, accounting for about half the company's revenues -- is likely to be profitable in the fourth quarter, Bezos said.
But the bright prognosis has done little to assuage wary investors who have sent Amazon (AMZN) stock tumbling in New York from 75-15/16 before last week's earnings, to just below 65 Thursday afternoon.
'Critical time'
Bezos -- who was in London to launch the U.K. site of Amazon's auction service and zShops, a third-party service aimed at small merchants -- argued that investors who bail out of Amazon now may regret their decision down the road.
"We think this is a critical category formation time," he said. "We believe that very passionately and we think it would be very short-sighted not to invest in all these new opportunities, this insurmountable opportunity. We don't even try to convince people of that; we tell them we believe it, we tell them that's what we're going to do and then investors get to self select. We think that's a pretty good system."
Bezos said Amazon has a "large cash position" that can be tapped as the company plows ahead with an ambitious expansion strategy in the future. Since its founding four years ago, Amazon has branched beyond its core book business into music, electronics, toys and now, zShops, a novel attempt to let small businesses market their wares directly to customers via Amazon's virtual mall.
Bezos has attributed the company's failure to turn a profit to his emphasis on customer-oriented acquisitions.
"We try to focus on the long term, on the customer experience," he said. "We obsess over the customers, and in the long run the stock will take care of itself. ? We're only interested in doing things where we think we can dramatically improve the customer experience."
Bezos, who was recently ranked second in Fortune magazine's survey of the 40 wealthiest people under 40 -- about $15.5 billion behind Dell Computer founder Michael Dell -- insisted that his strategy will stand the test of time.
"Investing isn't new, investing is an age-old thing to do," he said. "We aren't trying to optimize for short-term profitability." |
