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Technology Stocks : AMAZON.COM -- WORLD LARGEST BOOKSTORE
AMZN 227.22-1.4%10:45 AM EDT
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To: charles sims who wrote (21)5/16/1997 12:32:00 PM
From: Dan Woodbury   of 43
 
Agree. The problem with online businesses is that it is very easy for competitors to enter the fray. In this regard I liken online competition to the "Cold War" where the U.S. and Soviet Union fought each other by seeing who could build the most tanks, missiles, ships and airplanes. Over decades trillions of dollars were spent with the determination of staying ahead of what was viewed as a competitive threat.

Likewise, Amazon and Barnes and Noble and other book sellers will be spending millions of dollars over the next few years to see who can build the best online book site. Contrary to what someone said earlier, costs are not fixed. Technology is changing all the time and each company will be obliged to upgrade its technology and expand its services if it wishes to stay ahead. So while Amazon and other book sellers may be able to boast of high online book sales, I doubt they will turn a profit for many years to come. Consequently, after reality sets in, look for Amazon to go looking for a white knight to help it pay its bills.

Lastly, expect the underwriters to hype the stock in hopes of keeping the price up. Granted Amazon does a good job selling books online but the current stock price is 90% hype and speculation.
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