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

To: KeepItSimple who wrote (111427)	10/29/2000 12:05:03 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

This is an excerpt from Barrons. This is rediculous: "That reads to us as though Amazon would get $30 million in cash from Audible. But in fact, Amazon received $20 million in stock up front with a pledge for the remaining $10 million in the third year of their agreement. The reality is that the $20 million in Audible stock is now worth about $1.3 million, and Audible's ability to pay the rest is in question. The result of all of this is that investors could have been led to believe that Amazon would reap at least $450 million in high-margin cash revenues from its commerce partners as opposed to a fraction of that sum, as represented by pounded-down shares. Amazon, in response to telephone calls and an e-mail message, responded with an e-mailed copy of a joint press release, which relates to one of their commerce partners and is dated last December 1. It states: "In exchange for the investment and the marketing relationship, Amazon.com will hold approximately 16.6% of Ashford.com's outstanding common stock upon the closing of the transaction." The company would not answer any questions or offer any other examples. Meeker's research note certainly didn't discourage European investors from buying Amazon's convertibles. Nor did it hurt Amazon's stock on the Nasdaq. The shares soared 21% to $84.19 on February 3, the first trading day after Amazon announced its commerce-partner backlog. Another question is whether Meeker violated SEC quiet-period rules by publishing a research note about her employer's client prior to an offering. Convertible-bond offerings are covered by the same SEC rules as equity offerings, subjecting equity analysts as well as bond analysts to the same restrictions, says Harvey Goldschmid, a Columbia University law professor and former SEC counsel. According to a February 14 SEC filing, Amazon's eurobond deal was registered with the SEC. The rules indicate that quiet periods should begin when the underwriter and client agree to initiate an offering and ends 45 days after the offering has been completed. Meeker's publishing "would seem to be in sharp conflict of SEC quiet-period rules," says John Coffee, a Columbia University professor of securities law. "It doesn't sound like something she should have been doing. It doesn't sound kosher." Meeker was in Japan and unavailable for comment, but Morgan Stanley spokesman Ray O'Rourke said that the analyst "had no knowledge of the eurobond offering" when she published her note. "She published that note independent of the fact that our brokers were underwriting the [convertible] eurobond offering." In addition, O'Rourke said, Morgan Stanley's lawyers say that under their interpretation of SEC regulations, Meeker was permitted to publish a research note up to the day before the offering. What made her believe that the commerce-partner marketing payments would be in the form of cash? "We checked with the company," O'Rourke said, referring to Amazon. Amazon could have set the record straight sooner and explained the nature of the payments. If early payments were not intended to be made mostly in cash, it could have easily released a statement clarifying or correcting Meeker's information. Amazon seems to us to be reluctant to shed light on the severely impaired value of its commerce-partner stock payments. The company still counts about $30 million in stock paid by Drugstore.com in marketing fees as income on its books. Those shares are now worth only about $3 million. Similarly, the $50 million in Ashford stock it received is now worth about $16 million. "