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

AMZN 232.49

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Dec 30 3:59 PM EST

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To: H James Morris who wrote (91116)	1/15/2000 12:42:00 PM
From: gladman	Read Replies (1) of 164684

Here's an interesting article from Barron's where Lehman's Top Pimp Sir Jeffrey Applegate lays out his Virtual Portfolio for 2000. Note in the last paragraph Sir Jeffrey makes it a point that AMZN has been removed. >>Lehman Brothers' chief investment strategist, Jeffrey Applegate, has fashioned a Virtual Economy Portfolio as an addition to the firm's standard model stock portfolio. Stipulating that the wired economy can't help but gallop ahead with vision-blurring speed -- but disclaiming precise foresight as to which companies will lead the pack -- Applegate has come up with nearly three dozen stocks he believes represent the heart of this group. The strategist -- who for years has been bullish on stocks in general and on faster-growing sectors in particular -- aimed to create "an actively managed portfolio that is a pretty good call upon the explosive growth of the virtual economy." But importantly, he adds, "We wanted to do it in a way that was less risky than simply replicating an Internet index." One way Applegate mitigates risk is to consider profits, unlike those cliff-diving daredevils who plunge into any hot 'Net stock without peeking at the numbers. Thus, 70% of the portfolio is made up of companies that are currently profitable "or demonstrably on the road to profitability in 2000." To make his list, loss-makers must have a staggering opportunity for growth; he prefers to see them chalking up annual revenue gains of more than 100%. These criteria led him to emphasize established companies that are erecting the Internet's poles and wires-networking gear and data storage devices and such. This infrastructure sector makes up some 44% of the portfolio, more than double its weight in the Dow Jones Internet Index, Applegate's chosen benchmark. The strategist feels it's too early to determine which e-commerce or Web players are the likely winners in such a fast-shifting sector. So, his list dramatically underweights e-commerce, a bias that was sharpened when Amazon.com was removed, owing to Applegate's concerns about its business plan.<<

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