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

To: Victor Lazlo who wrote (93533)	2/14/2000 9:59:00 PM
From: H James Morris	Read Replies (2) \| Respond to of 164684

Try (206)266-7180. How many times have I said that Morgan Stanley will find Bezos more $money? Btw, Calamos Asset Management Inc is on a tear. Trust me. > NEW YORK, Feb 11 (Reuters) - Amazon.com Inc. <AMZN.O>, the world's leading Internet retailer, said on Friday it sold 690 million euros ($681 million) of 10-year convertible subordinated notes to help finance its expansion. The deal attracted sufficient demand for Amazon.com, known best for its online bookstore, to increase the offering by 15 percent from an original 600 million euros ($592 million). But the company, which has yet to post a profit and whose stock has been under pressure from recent reports of Internet vandalism, had to offer a substantial interest-rate coupon and two unusual provisions in order to attract investors. "The question of when they will become profitable remains a concern," said John Calamos Jr., vice president at Calamos Asset Management Inc. The firm, based in Naperville, Ill., oversees nearly $5.0 billion of convertible securities. "They are going to need the money to continue to grow, and convertibles are a cheap way of raising cash," Calamos said. Convertible bonds are hybrid securities that are usually less volatile than stocks. They offer investors less income than bonds because they are convertible into stock, but unlike stocks they provide a steady stream of income. Bondholders will receive an interest rate of 6.875 percent interest, and they can convert the notes into company stock at a level 36 percent above Thursday's closing price on Nasdaq of 76-3/16. That price is 33 percent off its 52-week split-adjusted high of 113. Investors had expected a coupon of 6.875 to 7.375 percent and a 35 to 40 percent conversion premium. Morgan Stanley, Dean Witter & Co. led the sale, which took place late Thursday. "The pricing is fair, and perhaps they left a little more on the table than normal," said Sri Nadesan, director of convertible bond research at Warburg Dillon Read LLC in Stamford, Conn. "The coupon is relatively high"--he said 5.5 percent would be considered normal--"but Amazon is also getting a high conversion premium; a normal premium would be about 25 percent." The sale increases Seattle-based Amazon.com's indebtedness to about $2.14 billion. Last January the company sold $1.25 billion of convertible subordinated notes with a coupon of just 4.75 percent. Amazon.com's new notes, which mature Feb. 16, 2010, contain two unusual provisions. The company has the right in the first three years to redeem the bonds early, but if it does it will remain responsible for three years of coupon payments. In addition, Amazon.com promised to reset the conversion price downward after one and two years if its stock price fails to achieve certain prescribed levels. "What Amazon is saying is, we think there is sufficient likelihood our stock price will be up, so if we're wrong, we're willing to offer a lower premium," said a source close to the transaction. Patty Smith, an Amazon.com spokeswoman, said the notes were denominated in euros rather than dollars because they were "designed to be marketed to the European community. That, Nadesan said, "may make it easier for Europeans to buy and hold the bonds, and allows Amazon to tap a large investor base." Jeff Bezos, Amazon.com's chief executive, said in a conference call last week that international expansion would be a priority this year. It already maintains Web sites in Germany and Great Britain. Sale proceeds will allow Amazon.com to continue its expansion. In recent months the company has partnered with and often invested in several online companies. Such deals promise Amazon.com a steady stream of cash for helping to promote those companies, analysts said, but has hurt its bottom line. The company on Feb. 3 said it lost $185 million in its fiscal fourth quarter, or 55 cents a share, seven more than analysts expected. But Amazon.com said its U.S. bookselling arm was profitable and would remain so throughout the year. Moody's Investors Service on Monday rated the notes Caa3, a low junk grade, with a stable outlook. A competing rating agency, Standard & Poor's, has not yet rated them. 17:09 02-11-00