Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Lizzie Tudor who wrote (72005)	8/5/1999 12:24:00 AM
From: Bill Harmond	Respond to of 164684

This is a lousy time to advertise anything except soft drinks, water parks, and beer..

To: Lizzie Tudor who wrote (72005)	8/5/1999 12:40:00 AM
From: Michael Young	Read Replies (1) \| Respond to of 164684

Why the convertible bond issue is so critical. I found this post on another thread that explains the importance: << Here's my take on the billion dollar convertible bond debacle facing AMZN. FWIW I'm an attorney and used to practice securities law over ten years ago -- not presently. There is virtually no chance that AMZN will trade above the $200 level in the next few years to allow the convertible bonds to be converted to avoid paying back the principal debt. In the meantime the continuous interest burden of the bonds is too much for AMZN to bear without immediate substantial cash flow from profitable operations. Since AMZN is a net business with little in the way of physical assets, there is no meaningful physical collateral security for the bonds. When time begins to run out and AMZN is between the rock (interest payments) and the hard place (bond default and Chapter 11 bankruptcy) the only way out of the dilemna is to REDUCE THE CONVERSION PRICE OF THE BONDS. Based upon the present market value of the stock, the conversion price would have to be reduced by approximately 60% to satisfy the bondholders (assuming they won't insist upon a preferred stock or other more favorable position than the common stock). The resulting dilution to shareholders from more favorable conversion is proportionate ---- an immense bitter pill which will be hard for the market to digest. All of the above maneuvers will be completed behind closed doors before being announced publicly. The institutions and insiders will get out (or buy puts) long before the announcement. This will cast a pall on market action for the stock for several months to come. At this point the smart money can already see the handwriting on the wall, and thus the stock will stay in a death spiral downward while the devil in the details is being negotiated. There is simply no way the bondholders will take a billion dollar loss while the stockholders profit from any equity position in AMZN. The long and short (ha-ha) of it is that AMZN will steadily decline throughout the remainder of 1999. The apparent ultimate support levels viewed by the technicians at 30 to 50 are too generous because they will need to be adjusted for the coming 60% plus dilution factor due to conversion price adjustment on the bonds -- thus a possible bottom price of maybe 20 (if AMZN is able to stay in business). AMZN is the most obvious and generous short opportunity of this bull market regardless of the direction of the general market during the next six months. Just my opinion, of course. Good Luck Play 4 Do>>