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

To: Skeeter Bug who wrote (106777)	7/31/2000 12:03:49 PM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 164684

July 30, 2000 Personalized E-Mail ------------------------------------------------------------------------ As Value of Internet Stocks Falls, Look To Sell Losers in Your Own Portfolio By GERRI WILLIS Staff Reporter of THE WALL STREET JOURNAL Does it get any worse for dot-com investors? Amazon.com, the sector's onetime blue chip, was swept by analyst downgrades last week after a well-regarded executive resigned and second-quarter sales growth missed estimates. Amazon shares are now down 73% from their 52-week high. The pain isn't limited to Amazon. The Dow Jones Internet Commerce Index is down 37% this year. Nearly 30 Internet stocks are now trading for chump change -- less than $2.50 a share. And, for investors who figured they'd wait for a merger to make them whole, think again. When Bertelsmann bought CDNow for a paltry $117 million this month, it valued the music retailer at just pennies over its share price. For investors, it may be time to dump the dot-com dogs that have little chance of survival in a market grown impatient with unprofitable companies. So, which should go? One company, perhaps, is Value America, the Charlottesville, Va., retailer that started as a vendor of everything from underwear to TVs. Backed by impressive investors, including Microsoft co-founder Paul Allen and the former chairman of Federal Express, Fred Smith, Value America appeared to be a solid bet. But pedigree wasn't enough, says Steve Harmon, founder of Zero Gravity Internet Group, which analyzes and invests in the sector. "Value America was way too late to the game when they launched in 1997," he says. "Amazon was already out." Eventually, the company narrowed its offerings to electronics and office supplies. The changes were too slow. By December, the company had laid off half its employees and cut its list of vendors. By spring, it was seeking capital to stay afloat. A Value America spokeman says the company's stock isn't getting credit in the market for its business model, which eliminates warehousing costs by using direct-to-consumer distribution. Today, even usually ebullient Wall Street analysts covering the sector have doubts. All four covering the company rate it a "hold." The stock trades below $1. Another dot-com dog? Buy.com. This retailer's business model -- selling products at a loss to generate traffic and then making up the difference with advertising revenue -- was questionable enough. Throw in the fact that founder Scott Blum had run-ins with federal securities regulators (he's since resigned and put his shares in a nonvoting trust) and you see why the stock is price is under $5. The company has expanded its offerings since it went public earlier this year, plus it has new management. Even so, the shares have tumbled from their winter high of $27.50. Mr. Harmon was reluctant to slap a sell recommendation on the stock, but says "the lights are dimming." Health care is another Internet sector loaded with battered stocks. Mr. Jacobs says he sold drugstore.com in February after the company failed to translate a relationship with Amazon.com into significantly higher revenue and began spending heavily on promotions. -- Gerri Willis is an associate editor at SmartMoney magazine. You may contact her at gwillis@smartmoney.com