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

To: Glenn D. Rudolph who wrote (116473)	1/30/2001 9:26:03 AM
From: H James Morris	Respond to of 164685

Glenn, forget the rumor about me not being in Scottsdale.<g> Btw, Don't forget Amazons global sales even if US sales are slowing down. >1/29/01 9:59 AM ET Despite a sneak peek at its quarterly earnings three weeks ago, there's plenty Wall Street expects to learn when e-tail giant Amazon.com (AMZN:Nasdaq - news) releases its full report Tuesday after the close of trading. Related Stories The DOT Rises as Some Dot-Coms Come Back Into Favor Big Retailers Continue to Dominate Online World Analysts will be watching closely how the company's expenses broke down in the fourth quarter and what the company will say about revenue growth in 2001. But first, a recap: On Jan. 8, the company released a surprise preview of its quarterly earnings a day before CEO Jeff Bezos was set to address a Morgan Stanley Dean Witter investment conference. The numbers were decent, but not awe-inspiring. The company said its sales during the holiday season fell short of Wall Street estimates, although most analysts gave the company a break as a slowing economy marred sales figures for most retailers in the latest quarter. Amazon said it will report sales in excess of $960 million, within the range the company previously said it would report, although less than the $1 billion analyst consensus estimate, according to First Call/Thomson Financial. Amazon estimated gross profit for the quarter of more than $210 million, and a pro forma operating loss of less than 7% of net sales. The company didn't say what it expects to report on a per-share basis, but the Wall Street consensus is for Amazon to report a loss of 26 cents a share, compared with a loss of 55 cents in last year's fourth quarter. Guiding Light For Tuesday's report, analysts are keying on two sets of figures: an expense breakdown and guidance for 2001. On the expense side in particular, analysts are hoping that Amazon's fulfillment costs -- expenses for shipping -- declined as a percentage of revenue. Fulfillment costs of more than 12% to 13% of revenue will be looked at negatively, says Shawn Milne, an analyst at Wit Soundview. Lowering Amazon's fulfillment costs is viewed as key to boosting the company's profit margins and setting it on a path to profitability. "I would say it was a decent sales quarter," says Milne, "but a key question is were they more efficient?" Milne has a buy rating on Amazon and his firm does not do underwriting. Indications from its earnings warning are that margins decreased in part because the company offered free shipping for all orders over $100 during the holidays in an attempt to drive revenue growth. In addition, Milne expects to see a sales breakdown by geographical region. He said it is possible this could show U.S. sales below expectations, but solid growth from abroad. He predicted that for both Amazon and online auction site eBay (EBAY:Nasdaq - news) -- the two premier e-commerce sites -- international business will boom in the coming years. "There are tremendous opportunities globally," Milne says. "eBay and Amazon are companies whose brands have already achieved global status." (eBay reported fourth-quarter earnings Jan. 18 that significantly exceeded Wall Street expectations.) Spinning It Forward "The big news on the call is what they will say about 2001," says Kevin Silverman, an analyst at ABN Amro. Silverman recently downgraded Amazon from a buy to an add rating -- similar to most investment banks' accumulate -- on the expectation the company will lower its revenue projection for the coming year. (His firm does not have an underwriting relationship with Amazon.) The previous guidance the company gave for 2001 revenue is about $4 billion. But with consumer spending on the decline, most analysts say that $3.5 billion to $3.8 billion is a more reasonable estimate. While Amazon has yet to turn a profit, analysts have remained optimistic about the company's prospects, especially as most other online retailers have imploded. In particular, eToys (ETYS:Nasdaq - news) is on the verge of collapse as Amazon and its co-branded site with Toys R Us (TOY:Nasdaq - news) cornered the market for online toy sales. Also, the company has about $1.1 billion in cash as of the end of the fourth quarter, plenty for it to reach break-even without having to tap the capital markets for additional cash, say analysts. Amazon shares gained 50 cents Friday to close at $19.50. In typical dot-com fashion, shares are well off their 52-week high of $85.94. The company plans a 5 p.m. EST conference call Tuesday with the investment community to discuss its earnings release.