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

To: Bill Harmond who wrote (69027)	7/22/1999 9:14:00 PM
From: Jan Crawley	Read Replies (1) \| Respond to of 164684

In amazon's case that's about $50. Remember you said "$65" during Aug98. Geeez, is $55 pre-split possible in the next few weeks?

To: Bill Harmond who wrote (69027)	7/22/1999 9:17:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Price: $115 1/16 Estimates (Jun) 1998A 1999A 2000E EPS: $0.06 $0.34 $0.60 P/E: 1917.6x 338.4x 191.8x EPS Change (YoY): 466.6% 76.5% Consensus EPS: NA (First Call: 09-Jul-1999) Q1 EPS (Sep): $0.05 $0.13 Cash Flow/Share: NA NA NA Price/Cash Flow: NM NM NM Dividend Rate: Nil Nil Nil Dividend Yield: Nil Nil Nil Opinion & Financial Data Investment Opinion: D-1-1-9 Mkt. Value / Shares Outstanding (mn): $134,240.4 / 1,186 Book Value/Share (Dec-1999): $2.77 Price/Book Ratio: 41.5x ROE 1999E Average: 21.0% Est. 5 Year EPS Growth: 50.0% Stock Data 52-Week Range: $175 1/2-$17 1/4 Symbol / Exchange: AOL / NYSE Options: Pacific Institutional Ownership-Spectrum: 45.1% Brokers Covering (First Call): 30 ML Industry Weightings & Ratings Strategy; Weighting Rel. to Mkt.: Income: Underweight (07-Mar-1995) Growth: Overweight (07-Mar-1995) Income & Growth: Overweight (07-Mar-1995) Capital Appreciation: In Line (28-Jan-1999) Market Analysis; Technical Rating: Below Average (21-May-1999) The views expressed are those of the macro department and do not necessarily coincide with those of the Fundamental analyst. For full investment opinion definitions, see footnotes. Investment Highlights: * AOL reported a solid FQ4. We are raising our estimates and maintaining our Buy/Buy rating. * Revenue increased 10% sequentially and 46% y/y to $1.4 billion, slightly exceeding our estimate. We are raising our FY00 estimate by $340 million from $6.2 billion to $6.5 billion. * Operating EPS of $0.13 exceeded consensus of $0.11, as a result of impressive operating leverage. We are raising our FY00 EPS estimate by $0.07 from $0.53 to $0.60—a healthy increase. * Subscriber growth of 755,000 came in at the low end of guidance, but was solid enough when viewed in light of the summer season and the situation in the U.K. Growth of non-paying users was solid. * Advertising and commerce revenue increased 11% sequentially to $233 million, slower than the industry growth rate but in line with our estimate. Backlog increased 15% sequentially to $1.5 billion. * Operating margin pre-goodwill increased an exceptional 5.5 points sequentially to 17.6%, as a result of leverage in all expense lines. * Gross margin increased 130 basis points sequentially to 46% as a result of increased advertising and commerce revenue, network efficiency and seasonally light subscriber growth. Comment United States Internet \ Electronic Commerce 22 July 1999 Henry Blodget First Vice President America Online Solid Quarter; Raising Estimates BUY Long Term BUY Reason for Report: FQ4 Results Merrill Lynch & Co. Global Securities Research & Economics Group Global Fundamental Equity Research Department RC#20120369 Stock Performance 0 20 40 60 80 100 120 140 160 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.10 0.11 0.12 1996 1997 1998 1999 America Online Rel to S&P Composite Index (500) (Right Scale)

To: Bill Harmond who wrote (69027)	7/22/1999 9:25:00 PM
From: Lizzie Tudor	Respond to of 164684

Mary jumped on the revenue ramp like I expected, but couched it that Q4 could be "up 40% or 100%" sequentially. Her guess is as good as anyone's. According to the call, Covey said q/q revenue in 4th qtr could be slower than last year (personally I don't believe it with toys and elec but lets go with that). Last year it was 65% sequential growth going into the qtr. So being conservative, say we get 350mm next qtr, add 65% and you are up to 577mm in the Xmas qtr. I'm looking at 550mm as the low for Xmas and about 700mm as the high. The problem with amzn's calls is the analysts are looking for product breakouts and amzn doesn't deliver. Like the guy that asked about auction growth. Bezos or Gatti (not sure who) said auctions were the fastest grower. Then a question which was clearly intended to extrapolate on absolute figures. Bezos then says growth is computed month/month, gross and leaves it at that. If I were an analyst this would annoy me, otoh if I were Bezos I would employ that technique! <

To: Bill Harmond who wrote (69027)	7/22/1999 9:39:00 PM
From: Robert Rose	Read Replies (1) \| Respond to of 164684

William, thanks for your take. My concern is this: amzn declined 15% on over triple average daily volume. Needless to say, HUGE on both counts. As a bellwether, amzn cannot help but portend something for the sector as a whole. Let's face it, what we debate every day the fund managers do too. They understand retail seasonality, buildout of infrastructure, and all that. Some buy the amzn story and some don't. For those that do (or did), amzn's Q2Q revenue growth simply didn't cut the mustard, imo. What today's action tells me is that a significant portion that DID buy the story ran for the hills. Sell amzn and then reevaluate the rest of the sector. Clearly, the inets were a momo dream from late 97 to Apr 99. Whether you believed the story or not, most knew or figured out that a lot of money could be made by going with the flow, following the momentum. And most knew, whether fundamental bull or bear, that the piper would have to be paid eventually, that the bubble would burst, that the Street would eventually start expecting the same things from the inets it expects from all companies: namely earnings. My fear now is that the two month pullback from mid April to mid June was not just a normal correction wringing out speculative excess, but rather the first in a series of pullbacks in a larger bear market for the sector - one in which valuations contract in order to eventually fall in line with other stocks, as measured by traditional metrics. Given that scenario, amzn at $50, as you postulate, sounds perfectly plausible.