latest news release, AMZN will drop to 75
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analysts said current trading levels can't be sustained. A sales report
from Amazon.com provided a dose of reality that could spell bad news
for smaller online retailers.
The Goldman Sachs Internet Index fell 0.5 percent
while the Amex Internet Index climbed 0.9 percent.
Amazon (AMZN) said fourth-quarter sales more
than tripled to about $250 million. Yet it also
cautioned investors that the higher seasonal sales
"will not translate into correspondingly lower net
losses in the fourth quarter."
The company's chief financial officer, Joy Covey,
said "aggressive product pricing" and other factors
held down profit margins. According to Amazon,
order fulfillment costs were higher. See story.
Big gains
Internet stocks made tremendous gains in 1998.
Amazon.com's stock has risen 966 percent since
the beginning of last year. Amazon shares
(AMZN), after a three-for-one split, rose 7 percent
Tuesday.
America Online and CBS (CBS) on Tuesday unveiled an alliance that
makes CBS.com a provider of news stories and broadcasts on AOL.
America Online (AOL) shares, which rose 552 percent in 1998, fell 1
percent Tuesday. See story.
At least one analyst said the Internet sprint might be over.
"Internet stocks [have run up] because of online avarice," said Rick Berry,
a technical analyst at J.P. Turner & Co. in Atlanta. "We're now starting to
see a decline that will be even more substantive as the first quarter
unfolds," Berry said.
Most Internet stocks are so overvalued that a steep drop is inevitable and
may have begun, Berry said. He sees Yahoo! falling to 175 a share,
America Online down at 102 and Amazon.com dipping to 75 a share
within the first quarter.
Among Internet stocks: Yahoo! shares fell 1/2 to 247 1/2. Ubid (UBID)
fell 12 1/2 to 121 9/16. On Monday, in contrast, uBid shares rose 27
percent. EBay (EBAY) slipped 13 to 227.
Online retailer Delia's (DLIA), meanwhile, rose 3/16 to 15 15/16.
The Nasdaq Composite Index, which contains many technology issues,
rose 39 points to a record 2247. |
