THIS IS A GOOD ARTICLE TO READ....................;^)
Amazon Pulling Away From
Competitors
(04/28/98; 7:16 p.m. ET)
By John Borland, Net Insider
With a stock split on the way, three new acquisitions
under its belt, and planned expansions into the music
and video sales business, Amazon.com appears to be
moving far ahead of its competitors.
Although physical-world megastore Borders Books and
Music is scheduled to come online soon with both
books and CDs, analysts said Amazon's direct
competitors are unlikely to follow it down the path of
digital diversification soon.
"Barnes and Noble has to get its act together on books
before it gets into music or video," said Vernon
Keenan, a senior policy analyst with Zona Research.
Amazon said Monday it had agreed to purchase two
online European booksellers as well as the Internet
Movie Database, calling the move a prelude to online
video sales. Last week the company opened the first
stage of its planned online music store. Neither venture
has a firm roll-out date, however.
Barnes and Noble, which has been Amazon's chief
online competitor, initially reacted to Amazon's
announcements by stressing the size of its own book
catalog. In a press statement Tuesday, company vice
chairman Steve Riggio said the site offered 600,000
different titles that could be shipped in 24 hours, calling
it "the world's largest standing inventory."
"We have achieved our goal of providing visitors to our
site with the largest number of book titles that can be
quickly delivered of any online bookseller," he said.
"Our online inventory continues to grow, almost daily."
A Barnes and Noble spokesman said the company was
not ready to announce any new market initiatives of its
own, but he stressed some of the chain's physical-world
stores already sell items such as music and stationary.
"We are constantly looking at product offerings that
make sense," said the chain's director of public
relations, Ben Boyd.
But analysts said the brick-and-mortar giant is unlikely
to follow Amazon into other online markets in the near
future.
"I don't think they're going to divert that much from their
core strategy," said ABN AMRO New York analyst
John Lyons. "They have to stay focused. If they start
doing that, they wind up diluting their brand name."
None of the big online booksellers have started to turn
profits yet. While Amazon is coming close, its
acquisitions and investments will likely push that grail
back to at least 2000, said Lyons.
Amazon said Monday it had posted fourth-quarter
revenues of more than $87 million, exceeding Wall
Street expectations.
Barnes and Noble, which had originally hoped to reach
online profitability by 1999, has also pushed back its
projections. The company's Internet site, which went
live in May, posted total 1997 revenues of only $15
million, Boyd said. But the company did not start its
full-bore print and radio advertising campaign until this
month, he added, and it expects to hit the $100 million
mark in 1998.
The company's relatively low online revenues have
disappointed some analysts. "None of the
brick-and-mortar players have made a significant dent
on the Internet yet," Keenan said. "Barnes and Noble
has not met the expectations you would have with the
giant brand [name] they bring."
Keenan noted the Internet start-ups have a natural
advantage in attracting Web-savvy engineers, since the
companies can offer incentives like stock options, and
can use the capital markets to raise quick money.
Traditional booksellers like Barnes and Noble and
Borders pay for their Web ventures largely out of their
existing stores' profits, giving them less flexibility than a
company like Amazon, he said.
The quick growth of online companies like Amazon
threatens even the largest traditional competitors around
the world, Keenan added.
"I'm not ruling them out. I think the first round is kind of
over...But I think they can afford to lose several
rounds," he said. "But if they're not careful, brands like
Amazon and CDNow will become the global media
brands, replacing local brands like Barnes and Noble."
Amazon's stock closed Tuesday at 95 3/4, up from 82
3/4 Monday.
>>>While Amazon is coming close,<<<< what the hell is this guy talking about?....a loss of 40 cents and the biggest loss yet dollar wise is coming close? These news people have no clue....and then in the next sentence he says likely there will be no profit until year 2000...........that should drive the stock another 10 points.....can't have those pesky profits now, can we? then you could assign a real valuation to the company, huh? P/E seems to be forgotten these days, whatta joke.......bought Oct 65 puts today, see y'all in a couple months.........;^) |
