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.

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

To: KyrosL who wrote (2129)	10/29/1999 10:37:00 PM
From: Bilow	Read Replies (2) \| Respond to of 3543

Hi KyrosL; Re that GE thing. They are hardly alone. The whole market stinks to high heavens of faulty accounting. Hey, look at AMZN. None of the companies that have largely replaced payroll with stock options account for it on their expense (except as a completely ignored footnote). When the S hits the fan, it is going to be nasty, but the S doesn't hit the fan until mom and pop have to get up from that couch. A bull market makes everyone a genius, and everyone right now is convinced that the way to financial security is through the ownership of stocks. I think the thing to watch for is interest rates being forced to go higher because of actual inflation. Wage inflation isn't going to do it, because that just means that mom and pop have more money to put into stocks. I wonder what percentage of the bears have given up now? -- Carl

To: KyrosL who wrote (2129)	10/31/1999 1:53:00 PM
From: Sir Auric Goldfinger	Respond to of 3543

Over the Rainbow With Amazon.Com. Pay no attention to those losses behind the curtain. Thus spake management at Amazon.com, the great and powerful, the Internet sweetheart stock. And for years, investors obeyed, focusing instead on Amazon's impressive revenue growth as a reason to pay dearly for the stock. The more money the company lost, the higher its stock seemed to go. Last week, however, things appeared to change in the Land of Internet Oz. Investors appear to be looking closer at Amazon.com and they do not like what they see. For example, cumulative losses at the five-year-old Internet retailer now exceed $550 million. Attitudes started changing late last Wednesday when Amazon.com, perhaps the most beloved of Internet stocks, reported its third-quarter earnings and fourth-quarter outlook in a conference call with shareholders. The company said that while its revenues more than doubled, its net loss in the period was $197 million, up more than fourfold from the $45 million it lost in the same quarter last year. Amazon also warned that it would not be profitable until 2002, well beyond analysts' hopes, and said it would spend $250 million to promote its Web site this Christmas. In the past, euphoric investors would have propelled the stock on a doubling in sales. But on Thursday, the shares plunged 6.5 percent on the news, wiping out $1.6 billion of Amazon's market value. And on Friday, the stock slipped again, to 70.625. For the first time, Wall Street analysts, who had been schooling investors in the "ignore losses" view, expressed frustration with Amazon management over the company's ballooning losses. Five analysts lowered their ratings on the stock, including Henry Blodget, Merrill Lynch's Internet guru who said in a report that investors would soon become "as tired as we are of endless postponement of gratification." Clearly, Amazon's numbers don't paint a pretty picture. Customer growth has slowed from 60 percent in the fourth quarter of 1997 to 22 percent in the most recent quarter. Revenues per customer have declined from $40.32 in the third quarter of 1997 to $27.16. Amazon has long said that a decline in revenues per customer is to be expected since not all shoppers buy each quarter. The company instead points to growing repeat orders as an indication of brand loyalty. The most recent period had a 72 percent repeat order rate compared with 55 percent two years ago. Interestingly, revenues per new customer have declined almost 20 percent from $51.68 in 1997 to $41.51 today. At the same time, cost per new customer has risen 10.2 percent, from $32.73 to $36.08. This is not the kind of progress most shareholders want to see. Amazon.com is not the only Internet company experiencing increasing costs to acquire new customers. In the most recent quarter, Ameritrade, one of the nation's largest Internet brokerages, greatly increased its costs associated with signing up new clients. These costs almost tripled from $157 per customer in the third quarter of 1999 to $451 in the fourth quarter. Irritation with Amazon's continued unprofitability among brokerage analysts, some of the very same folks who helped push Amazon's stock to a split-adjusted $105.0625 a share last April may indicate that Wall Street will be less inclined to help the company feed the beast with the proceeds from fresh stock and bond offerings. This is worrisome. In the last year and a half, Amazon has collected $1.75 billion from investors, money that it is now breezily spending on marketing and acquisitions. If this flow of funds is cut off, then the party is really over.