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

AMZN 220.21

-1.1%

10:30 AM EST

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To: H. Lee Grove Jr. who wrote (10347)	7/14/1998 6:20:00 PM
From: Rob S.	Read Replies (1) of 164684

To go on the multi-billion $ acquisition binge that would be needed to put meaning behind Amazon.vaporware's numbers would require that the company turn some of those paper profits held by investors into money in the corporate coffers. The only way they can do that is to issue a large secondary stock offering. That's not a bad idea; since they don't seem to be able to develop a business plan for making actual profits, why not just turn the hype machine into a mechanism for raking in investors dollars and then turn that into more substantial assets? Intel came in with lower than expected numbers and margins. This citadel of hard assets experienced gross margins of 49% down from 54%. Compare that to vaporware assets Amazonianut's gross margins of just 22% that are expected to shrink in this and the following quarters. Intel had earnings of 66c, down 29% from last year. They also had a write off that shields some of the impact of lower uP prices and scuttled product plans. Compare that to Amazianut's growing losses - at least Intel has profits to eat into. At least Intel has defendable market share and production capacity. Contrast that to Amazonianut's vaporware shrinking market share and non-proprietary and indefensible market position. The touted low asset model of Amazon should startle investors: if Amazonianut.com can rely on their suppliers to provide the hard assets to fulfill cutomer's orders, so can every other company that hopes to get into the business. No doubt, Intel will get clobbered because of not meeting analysts expectations while Amazonianut investors will keep a glimmer in their eye while they bid up the stock. Where will the upward movement end? I think it is another good time to sell naked calls against the stock, particularly if it moves up again tomorrow.

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