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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Benkea who wrote (60784)	10/17/2000 5:15:44 PM
From: Benkea	Read Replies (1) \| Respond to of 99985

(con)Man of the Year :-) Tuesday October 17, 4:20 pm Eastern Time Amazon stock tumbles to new year low By Scott Hillis SEATTLE, Oct 17 (Reuters) - Amazon.com Inc. (NasdaqNM:AMZN - news) slid to a fresh year low on Tuesday as the online retailing giant fell victim to ongoing concerns over its business model and a stock offering rumour printed in an investment magazine, analysts said. Amazon fell $2-3/8, or 9.8 percent, to $21-15/16 on the Nasdaq. The Seattle-based company has fallen from a high of $113 last December, and has lost almost half its value since Sept. 28, when it touched $40. Tuesday's slide followed a 15-percent drop on Monday after a brief, unsourced item in weekly financial paper Barron's said there was talk that Amazon might consider issuing up to $1 billion in new equity. ``The idea behind a potential equity deal would be to solidify its balance sheet, which has $2 billion in debt,'' Barron's said, noting that Amazon had enough cash -- about $900 million -- to fund operations well into next year. ``But Amazon may want to see its stock price get up toward 40 before it seriously considers any deal. An equity sale at current prices probably would enrage many shareholders who bought stock at much higher levels,'' Barron's said. Amazon spokeswoman Patty Smith said the company would not comment on ``rumors and speculation.'' Analysts said while such talk was interesting, it was virtually impossible to confirm, and that much-watched companies like Amazon were frequently targets of intense speculation. ``With high-profile companies like this you hear all kinds of rumours,'' said Adam Hamilton, an analyst with Seattle-based brokerage McAdams Wright Ragen. Commenting on a the possibility of a secondary offering by Amazon, Hamilton said, ``Paying down some of that debt would improve their credit rating and people's confidence in being able to maintain interest payments.'' ``But I don't know if there's enough confidence in the company right now to support a big additional offering like that,'' Hamilton said. Of greater concern was whether or not Amazon, which has racked up widening losses despite being the most popular shopping site on the Internet, would start showing progress towards profitability. ``There still seems to be lots of people questioning the business model,'' Hamilton said. ``Hardly a week goes by without a prominent fund manager or analyst saying something critical.'' Despite that, Hamilton said he was heartened by recent moves the company has made. ``From where I stand the model seems better than it did six to 12 months ago,'' Hamilton said. ``There's a lot less I have to take on faith than I did six months ago, but that hasn't stopped the stock from taking a haircut.'' Among moves that have won praise from analysts are a deal with the online arm of toy retailing giant Toys R Us (NYSE:TOY - news) to jointly run an Internet toy store and a pact with online photo service Ofoto Inc. to launch a full-service camera and photography store. Amazon is to report its third-quarter earnings next Tuesday. It is expected to post a loss of 33 cents a share for the three months, compared to a loss of 26 cents a share in the same period a year earlier.