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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (62921)	6/16/1999 4:12:00 PM
From: astyanax	Respond to of 164684

Internet Fund manager on Barrons vs. AMZN. Interesting, this issue of Barron's has an interview with Ryan Jacob, portfolio manager of The Internet Fund (WWWFX), the #1 fund last year (196%): interactive.wsj.com interactive.wsj.com I found very interesting his defense of AMZN when asked about the infamous Barron's article [excerpt below]. Also, there's a chat Session @ Barron's with Ryan Jacob tonight Wednesday, June 16 at 8 p.m. Eastern time. interactive.wsj.com The transcript of the April WSJ session is at netconductor.com --- Q: Did you happen to see the Barron's cover story on Amazon.com ("Amazon.bomb," May 31, 1999) a couple of weeks back? A: Yes, I did. Q: What was your impression? A: I think it is easy to take pot shots at Amazon. Amazon is actually not one of our larger positions in the fund. Amazon truly is building for the long term. They have decided [to] branch off into a lot of categories, which makes a lot of sense for them. Let's say they want to get involved in selling health and beauty aids and other drug-related products. They have a couple of choices. They can sell advertising or real estate on their Web page -- some five-year agreement for a bucket full of cash, which would immediately be accretive and would bolster the financial situation today enormously. Or they could take a little bit of money, invest it in this new drug store company and give them prominent placement on their site -- but own 40% or 50% of the equity in this company and grow with them. (Editor's Note: Amazon made such a move in late February, when it took a large stake in drugstore.com.) Q: Which is the better path? A: Clearly, one has an immediate economic benefit, which would make Amazon, in the eyes of reporters or anyone else, look a lot sounder financially. But if you were the chairman of the company, which [option] do you think would be building more long-term value? I would argue that if they have access to financing -- which they do; they have a fair amount of cash already -- that the approach they have taken longer term is the smart one. [But] it doesn't appear necessarily on their financial statements today. Q: It does strike me that when you are looking at these companies, it is everything that they don't teach you in business school. A: Well, I agree with you. You really have to look at these companies as venture capital situations. [They are] coming public much earlier in their business lives. Look at Amazon as an example. When Amazon went public, no one would have thought that they would have [had] these kinds of revenue numbers by this time -- and the kind of return. And clearly it was very high risk. The return you enjoyed by owning Amazon stock, I think, is 2,000% to 3,000%. It is not a traditional equity return. It is easy to poke holes in [these companies] and say, 'What is really here?' Again, you are taking [a] higher risk. We are not questioning that. We feel you are being compensated with higher return opportunities. == The Internet Fund Fan Club netconductor.com