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To: Libbyt who wrote (90622)	1/10/2000 9:49:00 PM
From: HG	Respond to of 164684

Thanks. It was interesting. I still have to respond to your earlier pm. I have been busy today and hope you will excuse me for the delay....

To: Libbyt who wrote (90622)	1/10/2000 11:15:00 PM
From: dayglo	Respond to of 164684

Thanks for the interesting article. I love it that the proof is in the results when it comes to investing. Kate

To: Libbyt who wrote (90622)	1/11/2000 10:23:00 AM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 164684

Fed's Broaddus Warns That Overheating Economy May Spark Inflation JAN 11,2000 RICHMOND -(Dow Jones)- The risk that the U.S. economy may eventually overheat is rising, despite widespread expectations among economists of a slowdown this year, a member of the Federal Reserve's policy-making Federal Open Market Committee warned Monday night. J. Alfred Broaddus Jr., president of the Federal Reserve bank of Richmond, told a group of business executives that although forecasts of an economic slowdown are "sensible," risks remain that the economy may grow too fast for inflation to stay dormant. Broaddus is a voting member of the FOMC. "Personally, I believe that the principle risk in the near-term outlook is that continued exceptionally strong domestic demand for goods and services may eventually cause the economy to overheat, and I think this risk is rising." Given those circumstances, Broaddus said the Fed should continue to raise interest rates preemptively to prevent an outbreak of inflation. The Fed raised interest rates three times last year in preemptive strikes on inflation, and is widely expected to continue its tightening stance again in early February. "Acting preemptively means not waiting until inflation itself is clearly evident before resisting it, if other indicators, like long-term interest rates, are signaling a higher risk of inflation," Broaddus said. "History teaches unequivocally that once inflation is evident in the economy, it is very difficult for the Fed to bring it down without risking recession." The comments suggest Broaddus may be inclined to support a rate increase when the FOMC meets for the first time this year on Feb. 1 and Feb. 2. Long-term U.S. interest rates, particularly the 30-year Treasury bond, have been rising steadily in recent weeks and futures contracts on the key Fed funds rate show investors are virtually certain of at least a quarter-percentage point interest-rate increase on Feb. 2. Broaddus, speaking to reporters after his speech, said "it's certainly possible that part of that increase (in long-term rates) reflects concerns among some market participants about the possibility of inflation." The Fed official said he had no near-term fear of inflation. "While there is some risk in the outlook, as always, I believe that prospects for continued growth with low inflation in this first year of the new millennium are good," he said. "But sustaining this performance will require the Fed to shift its focus from attaining price stability to maintaining price stability." In particular, he said, the Fed should seriously consider the use of "inflation targeting," in which the central bank would publicly identify the level of inflation it considers acceptable and then tailor monetary policy to attain that level. The European Central Bank and the Bank of England practice inflation targeting, but the Fed's monetary-policy goals have historically been more complex. "I believe a strategy like this could significantly enhance the credibility of the Fed's longer-term price stability goal, and as an important by-product, give us greater flexibility to deal with short-term problems without risking this credibility," Broaddus said. Despite his worries about the risk of eventual inflation, Broaddus said he doesn't disagree with consensus forecasts of economists. Those forecasts, he said, call for the economy to slow to a growth rate of 3% in 2000 from about 4% in 1999 while the unemployment rate holds steady at "a little over 4%." Moreover, he said, the forecasts suggest rising oil prices will put upward pressure on the consumer price index, "but this pressure is expected to diminish as the year progresses."

To: Libbyt who wrote (90622)	1/11/2000 2:48:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Price: $16 Estimates (Dec) 1998A 1999E 2000E EPS: d$0.72 d$0.78 d$0.81 P/E: NM NM NM EPS Change (YoY): NM NM Q4 EPS (Dec): d$0.27 d$0.27 Dividend Rate: Nil Nil Nil Dividend Yield: Nil Nil Nil Opinion & Financial Data Investment Opinion: D-2-1-9 Mkt. Value / Shares Outstanding (mn): $2,304 / 144.0 Book Value/Share (Mar-1999): $0.90 Price/Book Ratio: 19.17 LT Liability % of Capital: 0.0% Stock Data 52-Week Range: $26 1/2-14 1/4 Symbol / Exchange: BNBN / OTC Options: None Institutional Ownership-Spectrum: NA 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: ú BNBN had another great quarter. With the stock trading at approximately 10X 1999 revenue versus Amazon?s 14X multiple, we believe the stock continues to look undervalued. We reiterate our Accumulate/ Buy rating and our 12-18 month $30 price objective. ú BNBN pre-announced certain information from Q4 this morning and contained the following key pieces of information: 1. Approximate Revenue for Q4. 2. Newly acquired customers in the quarter. 3. Repeat order rate. 4. Guidance on expectations for the bottom-line in Q4. ú BNBN announced that it achieved approximately $81.5 million in revenue for Q4. We feel this is a very good number for BNBN and exceeds our published estimate of $70 million. $81.5 million in revenue represents 66% sequential growth and 215% Y/Y. The company achieved $20 million more in revenue this quarter than in the entire year of 1998 and we believe the long-term trend remains intact. ú For Q4, BNBN added 1.1 million customers. This is a very good number, in our view, and was well ahead of our estimate of 649,000. In addition, revenue per customer actually increased slightly Y/Y from $20 to $21. Bulletin United States Internet Software & Services 6 January 2000 Henry Blodget Daniel Good barnesandnoble.com Pre-Announcement of Q4 Results ACCUMULATE Long Term BUY Reason for Report: Company Update Merrill Lynch & Co. Global Securities Research & Economics Group Global Fundamental Equity Research Department RC#10100642 barnesandnoble.com ? 6 January 2000 2 ú During Q4, BNBN saw an increase in the repeat order rate from 63% to 66%. We generally consider this a positive as it demonstrates that existing customers are returning to the site to make a purchase. ú BNBN also announced that despite significant investments in its distribution, warehouse processing and technology, the company will not exceed estimated losses. We believe there could be some upside to our estimated EPS number. This is good news, in our view, given the heavy spending and increased losses of some other online retailers. It also appears that BNBN?s cost management is not coming at the expense of growth and customer service as 99% of orders received are reported to have been delivered before Christmas. ú We are not changing estimates for BNBN at this time. We will look to get more detail on the quarter when the company reports around the end of the month. [BNBN] MLPF&S was a manager of the most recent public offering of securities of this company within the last three years. [BNBN] The securities of the company are not listed but trade over-the-counter in the United States. In the US, retail sales and/or distribution of this report may be made only in states where these securities are exempt from registration or have been qualified for sale. MLPF&S or its affiliates usually make a market in the securities of this company. Opinion Key [X-a-b-c]: Investment Risk Rating(X): A - Low, B - Average, C - Above Average, D - High. Appreciation Potential Rating (a: Int. Term - 0-12 mo.; b: Long Term - >1 yr.): 1 - Buy, 2 - Accumulate, 3 - Neutral, 4 -Reduce, 5 - Sell, 6 - No Rating. Income Rating(c): 7 - Same/Higher, 8 - Same/Lower, 9 - No Cash Dividend. Copyright 2000 Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S). This report has been issued and approved for publication in the United Kingdom by Merrill Lynch, Pierce, Fenner & Smith Limited, which is regulated by SFA, and has been considered and issued in Australia by Merrill Lynch Equities (Australia) Limited (ACN 006 276 795), a licensed securities dealer under the Australian Corporations Law. The information herein was obtained from various sources; we do not guarantee its accuracy or completeness. Additional information available. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities ("related investments"). MLPF&S and its affiliates may trade for their own accounts as odd-lot dealer, market maker, block positioner, specialist and/or arbitrageur in any securities of this issuer(s) or in related investments, and may be on the opposite side of public orders. MLPF&S, its affiliates, directors, officers, employees and employee benefit programs may have a long or short position in any securities of this issuer(s) or in related investments. MLPF&S or its affiliates may from time to time perform investment banking or other services for, or solicit investment banking or other business from, any entity mentioned in this report. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security?s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk.