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Technology Stocks : barnesandnoble.com (BNBN) -- Ignore unavailable to you. Want to Upgrade?

To: E. Taylor who wrote (470)	7/8/1999 7:39:00 AM
From: Mohan Marette	Respond to of 766

Amazon faces new threats in music By Troy Wolverton Staff Writer, CNET News.com July 7, 1999, 5:50 p.m. PT Barnesandnoble.com's opening today of a new online music store represents the latest industry-wide move to put heat on market leader Amazon.com--and could even result in an online music price war, analysts say. In a further shakeout of the online music market, Barnesandnoble.com's entry comes two months after Buy.com and Virgin Megastores launched their own online stores. It also follows the relaunch of the CDnow site after the company's merger with N2K. Not only are big sites such as Barnesandnoble.com and Buy.com broadening their offerings to include music, but smaller niche sites also are likely to arise soon to cater to aficionados of specific types of music, said Geoffrey Bock, an analyst with the Patricia Seybold Group. In the meantime, Barnesandnoble.com's entry and its deep discounts on music could spark a price war for music online, International Data Corporation analyst Jill Frankle said. If that happens, she noted, firms will need to spend more on marketing, which will raise costs and affect profits. That means Amazon will have to continue to innovate and to outmarket the competition to maintain its lead, Bock said. And as the market continues to segment, he added, Amazon might need to target some of the more profitable music niches. Amazon launched its online music store in June 1998 and sold nearly as much music in six months as former leader CDnow sold in the entire year. Amazon has not broken down sales figures for its music store this year but continues to claim that it is the leading online music store. Because the online music business is still young, new sites are likely to have the opportunity to steal both sales and market share from Amazon and other established players. The prospects of Amazon and Barnesandnoble.com will depend on how well they execute their strategies, Frankle said. Because many sites sell similar products and look alike, she said, retailers will need to find ways to set themselves apart--including, for example, offering incentives for frequent buyers to entice them to return. In addition, Barnesandnoble.com could distinguish itself by using its bricks-and-mortar Barnes & Noble stores to target those customers not yet online, said e-commerce analyst David Cooperstein of Forrester Research. Amazon could suffer by not having that sort of hybrid strategy, he said. Barnes & Noble needs "some way to touch those households that are not going online to buy, which is still 80 or 90 percent of households," he noted. Even so, Cooperstein cautioned, Barnesandnoble.com might not be the player to capitalize on Amazon's weakness: It is late to the online music space, and music is not a big component of its bricks-and-mortar sales, which could hurt the company's online music efforts. "They're sort of climbing an uphill battle," he added. The next phase of that fight will involve new technologies such as the controversial MP3 music format and digital downloads, as well as an offering of CDs customized to include the songs a customer chooses, Frankle said, adding: "I think there's a lot more poised to happen in the music arena." news.com

To: E. Taylor who wrote (470)	7/9/1999 1:13:00 PM
From: Joe Mintz	Read Replies (2) \| Respond to of 766

Building long positions gradually in such a stock as BNBN, which could reward the patient investor with stellar returns in the longer-term, seems to represent a wise choice. The current pattern appears rather positive, given the deceleration and subsequent end to the post-IPO weakness (at least partly a symptom of worries about "Net-stock oversupply"), and the incremental rises on light volumes. It seems that investors are cautiously accruing long positions, attracted by the good valuation and explosive revenue growth(which it will continue to show) but also concerned by its poor beginning and by worries about broader economic trends, such as escalating bond yields. Yet, anticipating short-term returns remains challenging, particularly for a young issue with little track record and the speed with which the rules of the game seem to be changing. You don't need a large position to make a substantial profit. BNBN will be trading at several times today's level in the next 3-5 years, but in the near-term, a renewed dip to 15 cannot be ruled out. When taking a large position all at once in such a stock, one takes the risk that he/she will be forced to liquidate at an adverse price because of day-to-day volatility. Such a capitulation could cost more economically than the mere loss on the trade given that sharp gains seem almost inevitable(not riskless, of course) over the long run for a company underpinned by the fundamental trends surrounding BNBN. The net stocks do not trade like the "old growth" stocks. The volatility leaps up and down without warning, frustrating attempts to hold a well-balanced portfolio with risk exposures spread evenly across the core holdings. The investor in such fascinating stocks will do himself/herself a great favor by allowing for much more leeway than originally seems warranted or prudent - basically, go extra light to begin. Regards, J. Mintz