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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (11591)	8/16/2000 4:18:55 PM
From: Ken98	Read Replies (2) \| Respond to of 436258

<<Starbucks to Absorb $20.6 Million Charge on Failed Investment in Living.com By Jamie Paton TheStreet.com/NYTimes.com Staff reporter 8/16/00 4:07 PM ET Starbucks (SBUX:Nasdaq - news), the ubiquitous coffee retailer, served investors some disappointing news Wednesday, announcing that it would absorb a $20.6 million charge against earnings to offset its failed investment in the furniture Web site Living.com. Starbucks said the charge would trim earnings in the fourth quarter by 7 cents a share, but excluding the write-off, the Seattle-based company still expects to meet earnings estimates of 22 cents a share for the fourth quarter and 71 cents a share for the year. The charge, moreover, will not affect the company's bottom line in the following year, the company said. After dropping quickly around midday Wednesday after Starbucks disclosed the charge, the company's stock price rebounded somewhat, trading down 1/2, or 1.2%, to 40 1/4 shortly before the close. Starbucks finished Wednesday regular trading down 5/16 at 40 7/16. The news comes on the heels of an announcement Tuesday by Living.com, based in Austin, Texas, that said it was filing for bankruptcy, laying off its 275 employees and shutting down its Web site because of an inability to raise enough capital. Starbucks also chose to issue another caveat, telling investors it had investments of $43 million in public and private Internet and e-commerce companies, after the Living.com charge, and that similar charges could be on the horizon. "In recent months, companies in the Internet and e-commerce industries have experienced difficulties, including difficulties in raising proceeds to fund expansion or to continue operations," the company said in a statement. The demise of Living.com could rattle another Seattle-based company, Amazon.com (AMZN:Nasdaq - news), which is already reeling from a sagging stock price, a flurry of analyst downgrades and the recent departure of its president, Joseph Galli. Roughly six months after hammering out a five-year deal with Living.com, Amazon.com was busy assuring skeptics that the loss of its partner would not have much of an effect on its future financial health. Amazon.com, which would have received $145 million over five years from the partnership, had an 18% stake in Living.com. "We don't think it will have any material financial impact," said Patty Smith, an Amazon.com spokeswoman. Over the last two quarters, she said, the company has taken charges that offset its investment in Living.com. Analysts tend to agree with that assessment. Amazon.com gained only $1 million in revenue from Living.com in the first half of this year, Henry Blodget, the Merrill Lynch Internet analyst, said in a research note, so the fate of the furniture site is unlikely to impact Amazon.com. "The failure of Living.com will likely prompt additional observations that e-commerce is not proving to be all some had hoped it would be, but we believe most of this is already in Amazon's stock," said Blodget, who maintained his revenue estimates.>>