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

To: H James Morris who wrote (106564)	7/27/2000 10:11:25 AM
From: Bob Kim	Read Replies (1) \| Respond to of 164684

HJ, HB was right about AMZN being like AOL in 1996. Around this time in 96, ML rated AOL a 2-1 (as is AMZN following today's downgrade) and AOL was trading in the low $30s.

To: H James Morris who wrote (106564)	7/27/2000 10:25:37 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

"The Galli resignation was the last thing Becker talked about in her note. Amazon's biggest problem, she says, is that Amazon's nonbook businesses have demonstrated a "lack of traction." Moreover, "despite its powerful brand name and large, loyal customer base, there is softness in key consumer metrics." Among them: Its customer base isn't growing as much as expected, suggesting that it could take far more marketing dollars than once thought to keep growing at a healthy clip. " I am quite certain I have been saying this for years. "Becker estimates that marketing costs as a percentage of sales fell to 7.3% from 12.3% over the past year, which she believes is the culprit for the second quarter's expected sales shortfall. "To us," she writes, "this is an indication that new categories do not just sell themselves to existing customers, and that without stores to drive traffic or catalogs to remind shoppers, pure-play online retailers like Amazon may need consistently higher marketing support." " Surprise? There has been talk here about brick and mortar stores obtaining advertising by just being there as people drove by. Also, the need to continue heavy marketing expenses. "Another problem: Amazon's difficulty in "monetizing its customer base." The deals it has inked with drugstore.com (DSCM), Living.com, Greenlight.com and others promise to generate $500 million in revenue over the next few years, but Becker is concerned that "most, if not all of these companies will be unable to pay Amazon in future years." And in order to improve its cash flow situation, the company must lower its fulfillment costs by more than 25% while growing sales by more than 50%. That, she says, won't be easy. The result: "On virtually every measure, the stock looks expensive, even at these lower levels." " They do not have the money? Funny, they did not have ht money when they inked the deals. This is really sad considering the analysts are suppose to have a high degree of understanding and education in this area.