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

To: Bearded One who wrote (98685)	4/4/2000 10:43:00 AM
From: H James Morris	Respond to of 164684

>Given their accounting, the only way to look at Amazon is as a complete entity. Looking at it that way, they're in big big trouble. If you take away the splits Amzn is still a $732 stock! >PERISHABLE. The lessons of airlines and hotels aren't entirely applicable to other industries because plane seats and hotel beds are perishable--if they go empty, the revenue opportunity is lost forever. So it makes sense to slash prices to top off capacity if it's possible to do so without dragging down the prices that other customers pay. Cars and steel aren't so perishable. Still, the capacity to make these goods is perishable. An underused factory or mill is a lost revenue opportunity. So it makes sense to cut prices to use up capacity if it's possible to do so while getting other customers to pay full price. That requires segmenting the market--geographically, for instance--so that full-price customers can't see the bargains that others are getting. Conventional wisdom says that bargain-hunting software on the Web makes it far harder to charge different prices to different customers. ``There's going to be a domino effect where these markets one at a time succumb to the competition,' says Ethan S. Harris, a senior economist at Lehman Brothers Inc. But there are plenty of examples of prices in the Internet era, even prices on the Net itself, that aren't showing any signs of being driven toward marginal cost. A study last year by Erik Brynjolfsson and Michael D. Smith at Massachusetts Institute of Technology found that while Amazon.com Inc. charges less than bricks-and-mortar stores for books and compact disks, its prices remain substantially--and durably--higher than those of online discounters. Although discounter Books.com charged less than Amazon.com 99% of the time, its share of the traffic was just 2.2%. Tired of fighting a losing battle, Cendant Corp. shut down Books.com last year and sold its name to Barnesandnoble.com Inc. Brynjolfsson speculates that the Internet may heighten the importance of trust and brand awareness, both of which Amazon.com has garnered in spades. If Amazon.com, a seller of pure commodities, can avoid price wars, it should be even easier for companies selling things that are less commodity-like. Steel, for instance. New York-based e-Steel Corp., a Web site for steel transactions, offers a feature by which buyers can broadcast requests to every participating steelmaker. But few use it, preferring to receive bids only from the few mills they're interested in doing business with--even if that means cutting themselves off from some low bids. That suits high-end steelmakers just fine. Dofasco Inc. of Hamilton, Ont., one of North America's most profitable steel companies, says the vast majority of its steel is made to order. It uses e-Steel.com as a forum for hammering out specs with customers, not bidding for business. ``An auction site is of zero interest to us,' says Dofasco spokesman Gord Forstner.