Amazon.com, Inc. (AMZN) Message Board

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

AMZN 234.11

+0.4%

2:30 PM EST

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To: Bill Harmond who wrote (83806)	11/10/1999 11:37:00 AM
From: Eric Wells	Read Replies (1) of 164684

William - if someone had predicted Iridium's future based on their early losses - they would have been correct. Amazon's bleeding money. Whether this is a good thing remains to be seen. But most investors seem to think it is a good thing - despite the fact that there are some very real risks in the company's business model. I feel Amazon's current stock price does not adequately account for these risks - however, many investors feel it does. I don't think any of the regular contributors on this thread is of the opinion that Amazon is at risk of failure just because of it's huge losses - I believe that other factors are taken into consideration as well, such as: 1. Uncertainty over the impact of price competition on the web. 2. Uncertainty over the company's ability to continue to build and retain a strong brand for a retail site on the internet - will Amazon have to continue to spend ever increasing sums on marketing to prop up it's brand. 3. Uncertainty over the impact of low customer switching costs on the web. 4. Uncertainty over future competition from established bricks & mortar companies moving to the web (WalMart). 5. Uncertainty over the size of retail margins that can be realized over the web. 6. Uncertainty over the perceived comsumer benefits of a web super-store, such as Amazon is building, versus web specialty stores, against which Amazon is competing. 7. Recent executive departures (Shriram and Wright). 8. A CEO (Bezos) that has sometimes presented himself as arrogant and irresponsible with regard to spending money and placing emphasis on profits - and one who facilitates shenanigans like the announcement of an announcement earlier this week. 9. Uncertainty over the impact of taxes on the web (which will be coming soon). 10. Uncertainty over Amazon's ability to effectively execute on it's national warehouse distribution plan. 11. Uncertainty over the impact of competition from other established web leaders - such as Yahoo and AOL. It's not just the losses. There are many things that make me worry about Amazon as a company. Amazon may pull through, and despite all the concerns listed above, it may be the WalMart web equivalent in five years. But I believe that the above factors pose some very real risks to the company it's attempts to reach that goal. And I don't believe that many investors consider these risks when they push up the price of the company's stock. -Eric

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