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

AMZN 229.12

-0.2%

Nov 26 3:59 PM EST

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To: H James Morris who wrote (23469)	10/28/1998 6:26:00 PM
From: Rob S.	Read Replies (4) of 164684

My initial reaction to this quarter's results is "much better than expected". The degree of losses was in-line with or less than expected. They are now accounting for the acquisitions on a correct basis and that reflects in the greater GAP loss. Most impessive was the rate of growth of customers and sales. This upsets, at least for the time being, my thinking that sales momentum was lost. I expected to see only about 7% growth rate. Even taking out acquired sales contribution, sales increased at more than 25% over last quarter. Still, the competition has just geared up and the "step rate", (Joy Covey's way of putting it), increase in sales due to entry into music sales can not be expected this quarter. A big positive was the success of the introduction of music sales. Amazon's launch into music was very successful - racing past CDNow and others in the first full quarter of operations. Although it reached only $14 million in sales, that number is more than B & N's total sales last quarter. Bezos seems very respectful of the entry of Bertelsmann and venture with Barnes & Nobel. They are expected to be awsome competition in Europe. Bezos and Covey have warned that sales growth is unlikely to continue in future quarters. However, they say that the most urgent task is to assure that they can handle growth in fall/Christmas sales. Seasonally strong sales can be expected to drive the numbers higher this quarter. Although the loss per share seems threatening, the long-term success of the business model remains speculative, and the effects of competition has only started to be felt, the upset to the grand plan that many (including myself) expected this quarter has been fairly soundly refuted. Although the speculative fever and expectations have run high of late, my guess is that Amazon will head up a bit before profit taking steps in. The analysts have expressed their congratulations and are very enthusiastic. I expect the stock to rise toward

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