Tease us with a positive Amzn spin...I need it!
How about a Amzn cash flow positive post...You know like the bull shit you used to post to Glenn?
>Seattle, July 26 (Bloomberg) -- Amazon.com Inc. shares fell as much as 9.3 percent after a Lehman Brothers analyst cut her rating on the stock, citing slow growth in average order size and in sales of new items such as home-improvement supplies.
Amazon.com dropped 3 5/16, or 8.8 percent, to 34 5/16 in early afternoon trading after falling to as low as 34 1/8. The biggest Internet retailer discloses second-quarter results today after the close of regular trading.
While money-losing Amazon.com has enough cash to carry it through until it turns a profit, customers who have bought books and other goods offered early on by the six-year-old company are not spending as much on new items as planned, wrote analyst Holly Becker in a report. She estimates Amazon.com cut marketing costs in the first half to 7.3 percent of sales from 12.3 percent last year.
``It may take more marketing dollars than originally thought to keep the company growing at a healthy clip,'' Becker wrote.
Shares of the largest Internet retailer are too expensive by ``virtually every measure,'' Becker wrote. She lowered her rating to ``neutral'' from ``buy.''
Amazon.com trades at 4.7 times sales, more than double the average 2.2 times of other retailers such as Wal-Mart Stores Inc., Home Depot Inc., Kohl's Corp., Best Buy Co. and Bed Bath & Beyond Inc. Other Internet retailers have dropped to valuations below 2.5 times sales, Becker wrote.
Becker also cited concern that Amazon.com won't reap the expected payoff from its investments in other Web companies, many of which are struggling to generate sales.
2nd-Qtr Forecast
In the past year, Seattle-based Amazon.com agreed to market Drugstore.com Inc., Living.com, Greenlight.com and other Web sites in exchange for payments totaling about $500 million.
``We are concerned that most, if not all of these companies will be unable to pay Amazon.com in future years,'' Becker wrote in her report.
Becker's report comes almost a month after a Lehman Brothers convertible debt analyst, Ravi Suria, warned that high debt, negative cash flow and ``poor working capital management'' would put the company at risk. His report knocked the shares down to a 52-week low of 32 15/32 on June 23.
Yesterday's resignation of President and Chief Operating Officer Joe Galli, who left to become chief executive of VerticalNet Inc., will not hurt Amazon.com's outlook, Becker wrote.
Galli's departure after 13 months did worry some investors. Amazon.com shares plunged as much as 14 percent early yesterday as speculation about his resignation began to spread. The stock recovered some ground, ending the day down 2.9 percent.
The shares have lost a quarter of their value in the past two months, in part because of speculation that Amazon.com won't meet some second-quarter sales forecasts.
Banc of America Securities analyst Tom Courtney lowered his rating on the stock yesterday to ``buy'' from ``strong buy,'' citing concern that the company won't meet his $600 million sales estimate.
His target was higher than the $585 million average estimate of analysts polled by First Call/Thomson Financial. Revenue in the year-ago quarter was $314 million.
The company's loss, excluding merger-related costs such as the amortization of goodwill, is expected to widen to 35 cents a share from a split-adjusted 26 cents a year earlier. Including the costs, the loss will be even greater.
Jul/26/2000 13:20 ET |
