Plugged in, by Eric Savitz (http://interactive.wsj.com/articles/SB904949829488922500.htm) also talks about Amazon:
Amazon.com shares plunged from 131 to 78 over a nasty five-session stretch, before bouncing back to close last week at 86 1/4 . Prior to the plunge, insiders were selling. On August 10, a day on which Amazon closed north of 121, Amazon director Tom Alberg filed with the SEC to sell 30,000 shares; Joy Covey, CFO, filed to sell 25,000; and Joel Speigel, vice president-engineering, filed to sell 15,000. August 26, with the stock at 127 1/4, the company's chief information officer, Richard Dalzell, filed to sell 25,000 shares. One day later, with the stock at 119, Amazon director Patricia Stonesifer filed to sell 24,000.
Jonathan Cohen, Internet analyst at Merrill Lynch, last week issued a less-than-bullish short-term "reduce" rating on Amazon.com. Cohen contends that, while the company has solid management, book-selling is a low-margin business, whether via stores or over the 'Net. The stock's market cap, he notes, remains greater than all the profits generated by every company in the publishing and book retailing businesses in 1997 combined. He thinks the stock is worth under $50 a share.
David Rocker, a New York-based hedge-fund manager, advises shorting Amazon's stock and buying its junk bonds. Earlier this year, Amazon raised $325 million selling senior-discount notes due 2008. The bonds, which pay no interest for five years, were priced at 61.507, to yield 10%. While the bonds barely budged as the stock soared earlier in the year, they've weakened lately. Last week, they were being offered at 50, with no bidders in sight. At that price, the yield stands at a hefty 12.9%. |
