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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 226.19-1.8%Dec 12 9:30 AM EST
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To: clutterer who wrote (26414)11/17/1998 2:39:00 PM
From: Rob S.  Read Replies (3) of 164684
 
AMZN has built up it's business and stock price on the promise that it will deliver commodity stuff at low prices and yet somehow make a healthy profit in four to five years. It is growing rapidly selling lots of stuff at a 12% loss per sale. It's game plan predicts that it can both lower the cost of doing business substantially while increasing gross margins. That rosy scenario was hatched at a time when competitors were almost non-existent and prices were of secondary importance to having a crisp and useful "Web Experience". By now, web tools have improved (faster than even the most optimistic web experts imagined just six months ago) to such a point that for LESS money you can build a better, faster site that competes favorably feature-for-feature with Amazon or anyone else in the business.

Now competition is joining the fray almost on a daily basis and the newest flood of competitors are directly attacking Amazon's weakness - they have the resources to compete on price while Amazon must add hundreds of millions worth of new facilities and inventory. Price is becoming the big factor that destroys the rabid speculation that Amazon can somehow reap huge profits "in the distant future on a galaxy far from our own reality". yes, once again Amazon.com has been transported squarely to Bizarro World where valuations ignore reality and competition doesn't mattter.
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