Amazon.com (AMZN; $69 7/16; D-2-1-9 to D-1-1-9)
Lowering Dec00E from d$1.00 to d$1.15; 01E d$0.25
Strong Q4
ú Amazon had a strong Q4, performing well in most metrics. We are raising our
intermediate-term rating from Accumulate to Buy with a 12-18 month price objective of
$100 (9X 2001E revenue of $4.6B)
ú We continue to believe that Amazon will be the long-term beneficiary in the e-commerce
game. Thanks to increased disclosure from management, highly-profitable new
partnership deals, and a positive outlook for 2000, we now have greater confidence in
the long-term profit potential.
ú Q4 Highlights: 1) revenue of $676 million - up 90% sequentially and 167% Y/Y (an
acceleration),
2) 3.8 million new customers, ahead of 3.5 estimate, 3) $19 customer acquisition cost,
best in the industry and better than expected, 4) revenue per customer flat Y/Y (good
news), 5) $38mm positive cash flow from operations, 6) US book business profitable in
the quarter, 7) detailed picture of the business with revenues broken out by product
category, and 8) positive outlook for 2000 including improving margins for the balance
of the year.
ú We are raising our 2000 revenue estimate from $2.6 bil to $2.75 bil and our 2001
estimate from $4.4 bil to $4.6 bil. We are increasing our 2000 EPS loss estimates from
($1.00) to ($1.15) and maintaining our 2001 loss estimate of $(0.25).
ú Grade for the Quarter: B+ (missed EPS). Grade for the Outlook: A- .
(H. Blodget)
Internet/e-commerce
The B2B Market Maker Book
ú A new species of company is exploding onto the scene - the B2B market maker. We
believe that over the next five years, B2B market makers will cause profound change
in the world economy and, possibly, create more than $1 trillion in stock market value.
B2B market makers act as infomediaries and transaction engines within large,
established, often stagnant industrial industries. Capturing just a small portion of the
enormous value of goods and services transacted within these industries should translate
into significant revenue and (hopefully) profit for the B2B market makers.
Bulletin
United States
3 February 2000
Morning Notes Summary
Part 4
Merrill Lynch & Co.
Global Securities Research & Economics Group
Global Fundamental Equity Research Department
RC#11203416 |
