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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end? -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (1708)	7/25/1999 3:53:00 AM
From: JOHN W.	Read Replies (3) \| Respond to of 3543

BARRONs is calling the end for AMZN BARRONS 7/24 Since we wrote our cover story entitled "Amazon.bomb" in late May, we've heard no end of vitriol from Amazon's diehard supporters. The complaints came by e-mail, by snail mail and by phone. But all those zealots probably weren't feeling too pleased with themselves on Thursday, when Amazon.com shares fell 18 1/4 to close at 107 3/16. The catalyst for the latest slide in Amazon shares was the company's report on Wednesday evening that losses for the second quarter, after excluding certain charges, widened to $82.8 million, or 51 cents a share, from $17 million, or 12 cents a share, a year earlier. Although Amazon had prepared Wall Street analysts for the gaping loss, Wednesday's report contained other disquieting facts. Chief among them was the company's plan to spend more than $300 million during the next two calendar years on moves like expanding warehouse capacity to more than four million square feet. That's 10 times the warehouse space Amazon had available at the end of 1998, according to Bear Stearns analyst Scott Ehrens, who downgraded the stock to "attractive" from "buy." Amazon also disclosed that in the latest quarter it had increased its employee roster by more than a third, to 4,200. On top of that, inventory items such as books and tapes have doubled to $59.4 million since the first of the year. These decidedly depressing details prompted analysts to once again increase their estimates of Amazon's future losses. Before last week's news, analysts expected Amazon to post a loss of $1.72 this year; now they see a $1.86 loss, according to the folks at First Call. Likewise, the average expectation for Amazon next year has been changed to a loss of $1.45 a share from a loss of $1.25. Just six months ago, analysts were expecting Amazon's loss for next year to amount to just 15 cents a share. Amazon boosters would argue that the wider losses are justified because the company is spending money to enter new, promising businesses, like selling toys and electronic gizmos on the Internet. Taking this into account, analysts raised their expectations for Amazon's revenues to $1.43 billion for this year, up from a previous estimate of $1.38 billion. For next year, the revenue target has been raised to $2.26 billion, from $2.10 billion. Amazon's revenues in the second quarter grew 171% to $314 million, but that's down from a growth rate of 236% in the first quarter. Moreover, revenues last year had been growing at a clip as high as 446%. Even Merrill Lynch's Henry Blodget, who still has a long-term buy recommendation on the shares, expects Amazon's revenue growth to decline to 97% in this year's fourth quarter. All this might be fine if Amazon was moving closer to turning a profit. But it's doing just the opposite. And Amazon's losses are actually worse than they first appear. The 51-cent second-quarter loss is a "pro-forma" number, meaning it excludes charges for the amortization of goodwill, other merger and acquisition-related costs and costs "related to stock-based compensation." We tried to ask company officials what this included. They declined to return calls. One thing is for sure: These special charges are growing rapidly. In the second quarter alone, they totaled $55.2 million, up from $5.6 million in the second quarter of last year. When included in the latest quarterly results, they transform Amazon's 51-cent loss into an 86-cent loss. On the plus side, Amazon did open 2.3 million new customer accounts in the second quarter, bringing the company's client roster to 10.7 million. But Amazon's average quarterly revenue per account shrank in the second quarter to $29, from $35 in the second quarter of last year, according to Merrill's Blodget. Similarly, the estimated cost to bring in a new customer increased dramatically, to $20, from $14. When our cover story on Amazon appeared, the stock was trading at 118 3/4 . Within about two weeks, it had dropped to 89 3/4, before drifting back up to 142 1/2 by mid-July. Late Friday the stock was changing hands at 114 9/16. We still think that in the long run, it's headed a lot lower.

To: Jorj X Mckie who wrote (1708)	7/25/1999 3:11:00 PM
From: Sir Auric Goldfinger	Respond to of 3543

AMZN margin, well that certainly will up the average transaction size. Perhaps Chuck is sending a signal about his views of internet stocks.