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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: KM who wrote (38294)	1/28/2000 1:59:00 AM
From: Jacob Snyder	Read Replies (1) \| Respond to of 99985

I think the market is getting tired of this: WSJ, January 28, 2000 SANTA MONICA, Calif. -- Online children's retailer eToys Inc. said fiscal third-quarter sales more than quadrupled even as it reported losses in line with analysts' expectations. But that didn't prevent a 21% plunge in eToys shares to a 52-week low-well below the company's IPO price-in the latest sign of investor uncertainty about the prospects for Internet retailers. The sell-off came after Chief Executive Toby Lenk said the company will accelerate bringing its distribution centers in-house, a move that may increase costs in the short term in the highly competitive online toy category. Analysts said eToys (www.etoys.com) bested competitors in most every category by a wide margin. Despite running neck-and-neck in site traffic with eToys throughout the Christmas holidays, rival Toys "R" Us Inc.'s Web site (www.toysrus.com) reported $39 million in sales, less than half that of eToys. KBKids.com Inc. (www.kbkids.com), another competitor, spent about $45 million on advertising to achieve an estimated $30 million to $40 million in sales, said Anthony Noto, a Goldman Sachs analyst. EToys went public in May 1999 at $20 a share, and the stock hit a high of $86 in October. At 4 p.m. Thursday on the Nasdaq Stock Market, it was down $4.375 to $16.875 Investors continue to question when online retailers, including eToys, can make money given the variable competitive landscape. In addition to competitors such as Amazon.com Inc., Toysrus.com and KBKids.com, eToys now must also face Wal-Mart Stores Inc., which refurbished its Web site (www.walmart.com) earlier this month. Moreover, some of its online rivals appear to have easier access to more money. Just Thursday, KBKids.com said it filed to raise up to $210 million in an initial public offering. "Even if eToys won this battle, people wonder if they'll win the war," said Lauren Cooks Levitan, an analyst at BancBoston Robertson Stephens Inc. "And whether the war is worth it."