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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 232.88-0.8%Nov 17 3:59 PM EST
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To: llamaphlegm who wrote (10931)7/20/1998 7:00:00 PM
From: Rob S.  Read Replies (3) of 164684
 
Amazon might go our for a secondary offering. A rumor I have heard has it that their investment bankers have broached the subject. They could see the stock price and market enthusiasm as being at a pinacle. The offering would allow them to retire the near junk-bond status 10% debt (Moody's rated it as speculative and that's why it cost Amazon 10.1%). It's also likely that insiders will seize on the opportunity to tender some of their shares and take a couple hundred million to the bank (how tempting that must be). The remainder of the offering would be used to bolster the current cash reserves, pay for the needed build-out of distribution and redundant server centers, increase inventory levels, and do some acquisitions.

A word of caution to short-sellers; although the underlying reason for the secondary would be to pick a plum, the active participation of the major retail brokerages may spur the price even higher, (institutions will stay away except for, perhaps, a quick turn). The rumor has it that the target price would be set at 140-150/share. The net effect of the offering would be a short-term pump on the stock followed by the effects of dilution and selling pressure, probably setting up a great short-selling op.

Investor relations at Amazon.com declined to comment on the rumor, saying only that they would not confirm or deny it.
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