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

To: ms.smartest.person who wrote (107075)	8/12/2000 1:44:58 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 164684

Is Jeff Bezos Father Christmas? Since Toysrus.com turned out to be the Grinch who couldn't deliver Christmas in 1999, Amazon.com (Nasdaq: AMZN) CEO Jeff Bezos will play Santa Claus this year. In a move hailed by analysts and loathed by competitors, the two companies will jointly sell toys online this holiday season. While company executives say that there are no immediate plans to do similar deals for Amazon's other channels, many see Thursday's accord as an acknowledgement by Amazon that it can't compete outside its core markets without significant help selling such things as hardware, lawn and garden supplies, and furniture. Says Forrester Research (Nasdaq: FORR) analyst David Cooperstein: "If I were Home Depot, I'd be giving Amazon a call." Since its inception in April 1999, Toysrus.com has run into one snafu after another, culminating in a botched Christmas season. Amazon, meanwhile, has been struggling to redefine itself as more than a music and book retailer. The company has launched channels to sell toys, furniture, and garden supplies to little success so far. A report by Sanford C. Bernstein & Company analyst Faye Landes found that consumers still view Amazon as merely a seller of books, music, and videos. Amazon's toy inventory stinks, while Toysrus.com has access to tons of merchandise but has major problems delivering. Last month, Toysrus paid the Federal Trade Commission $350,000 in fines for bungling Christmas in 1999. The company angered thousands of customers last year when it didn't deliver their toy orders by Christmas. This year, Amazon says things will be different. Under the terms of the deal, Toys R Us will provide the product, and Amazon will sell and deliver it through its Web site. Starting in the fall, visitors to Toysrus.com will be redirected to Amazon.com. That makes Toys R Us Amazon's elf, an online concession many have expected. CHRISTMAS CHEER The upshot: these two companies need each other for a merry Christmas on the Web. Amazon's stock has been trading close to its 52-week low as investors have become increasingly skeptical of the Internet superstore's ability to keep growing. Meanwhile, Toysrus.com's inability to handle massive Web orders has been well documented. "This is an exact right deal to do," says Mr. Cooperstein. He says each company's strengths will compensate for the other's glaring weaknesses. The deal is also good for Amazon, Mr. Cooperstein adds, because the alliance will infuse the company with much-needed cash. The ten-year deal calls for Amazon to receive regular fixed payments from corporate parent Toys R Us (NYSE: TOY), a set payment for each item shipped and a percentage of the new venture's overall revenues. Toysrus.com will purchase and maintain the inventory in Amazon's warehouses. Amazon will run the Web site and handle customer service, fulfillment of orders, and shipping. Amazon will also receive warrants to acquire 5 percent of Toysrus.com. The deal also calls for visitors to the toy store's new online baby boutique, Babiesrus.com, to be redirected to Amazon.com by next year. Some analysts say the alliance spells trouble for stand-alone Web startups such as eToys (Nasdaq: ETYS) and highlights the difficulty of competing in the online toy market. Since Christmas, the Walt Disney Company (NYSE: DIS)'s Toysmart.com and Toytime.com both went out of business. KBkids.com is still in business but struggling. In the spring, the company pulled a planned IPO, and in June it fired its founder and chief executive officer along with 30 percent of its workforce. The FTC also fined KBkids.com $350,000 last month for bungling thousands of Christmas deliveries. THE BIGGER THEY ARE ... Meanwhile, two brick-and-mortar giants -- Kmart (NYSE: KM) and Wal-Mart Stores (NYSE: WMT) -- are scrambling to capture some of the online toy market this holiday season by launching stand-alone Web sites of their own. However, neither Kmart's Bluelight.com nor Wal-mart.com appear to be significant threats this year. In fact, Media Metrix (Nasdaq: MMXI) reports that clicks on Wal-mart.com fell from 1.6 million in January to 1.3 million in June. Bluelight.com has fared a little better, showing an increase of 600,000 clicks to 1.8 million over the same period. But analysts warn that the same problems that dogged Toysrus.com last year appear to be hampering Kmart and Wal-Mart. This leads to speculation that the two old-economy companies may try to forge similar deals with Web startups such as eToys. EToys, however, remains defiant and says it has no plans to do a similar deal. "This deal is a clear admission that neither of these companies can compete alone against us," an eToys spokesman says. "This is a last-minute scramble" for the holiday season. You can find this article at: redherring.com ***** Not absolutely sure, but I think Softbank invested in Toysrus late winter or early spring of this year. If Softbank has put VC money into Toysrus, this could be an added benefit. Softbank which is having CMGI-type stock price problems right now has over 400 companies in their portfolio, including a huge % of Yahoo!. Could this be why the CEO left? I have no position in AMZN, SFTBF. Merry