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

To: Victor Lazlo who wrote (133550)	10/25/2001 9:47:11 AM
From: H James Morris	Respond to of 164684

Yeah, and Glenn trusts Henry Blodget. seattlep-i.nwsource.com >Thursday, October 25, 2001 By KATHY MULADY SEATTLE POST-INTELLIGENCER REPORTER Disappointed investors dumped shares of Amazon.com yesterday, sending the stock price plummeting 20 percent, or $1.91, to close at $7.64. The Seattle-based Internet retailer reported Tuesday that third-quarter sales were up only slightly, narrowing losses, compared with the same quarter a year earlier, reduced expectations for the fourth quarter, and said sales in its books, music and video business fell 12 percent. Company executives said they still expect pro forma profitability in the fourth quarter, but have yet to say when they might reach net profitability. Amazon is also facing a class-action lawsuit, brought by investors who claim the trading price of Amazon stock was artificially inflated and that the company gave investors false information. The lawsuit was filed Oct. 5 in U.S. District Court in Seattle by the law firm of Milberg Weiss Bershad Hynes & Lerach on behalf of Maxine Marcus and other investors. The class action consolidates about two dozen lawsuits with similar complaints filed all over the country since March. "There is nothing new here," Amazon spokeswoman Patty Smith said. "Unfortunately it follows a pattern of similar lawsuits we have seen filed against other companies, such as Intel, Oracle, Morgan Stanley and Apple. We stand behind our record of exhaustive public disclosure regarding business and financial results." A federal judge recently dismissed a case filed against Morgan Stanley analyst Mary Meeker on behalf of shareholders that accused Meeker of issuing overly optimistic stock calls. The Amazon lawsuit names founder Jeff Bezos, Chief Financial Officer Warren Jenson, former President Jeff Galli and members of the Amazon board of directors as defendants. There are now 20 named defendants in the lawsuits, including some analysts and financial institutions. The 200-page lawsuit makes much of Amazon's "get big fast" growth plan, claiming that the company had to raise billions of dollars to fund the massive expansion and cushion its huge losses. "This need to raise capital in turn made it very important that Amazon push its stock price higher," according to the lawsuit. The suit also alleges that Amazon has consistently inflated its total number of customers; that insiders took advantage of the inflated stock price by selling huge amounts of stock; made false statements about its business model; and took large inventory write-offs caused by internal inefficiencies. Amazon is expected to file a formal response to the claims. "These cases take a long time," said Lori Feldman, an attorney with Milberg Weiss Bershad Hynes & Lerach in Seattle. Amazon.com has racked up $2.87 billion in losses since it was started in 1994. Yet, analysts still seem inclined to be patient with the Internet retailer. Eleven analysts have "buy" ratings on Amazon.com, while 17 rate the company "hold" and three recommend "sell," according to Bloomberg data yesterday. Merrill Lynch analyst Henry Blodget wrote in a report that the third-quarter drop in books, movies and music sales was "shocking." He downgraded the company's stock to near-term "neutral" from near-term "accumulate." Blodget added he still believes Amazon.com will build a successful business. Others are more concerned. "If holiday sales are weak and the distribution centers run inefficiently, the fourth-quarter operating profit goals will be in jeopardy," analyst Scott Reamer of SG Cowen wrote in a report. He cut his stock rating to "neutral" from "buy." Amazon, meanwhile, downplayed the significance of the stock plunge. "The only thing you get from watching the stock price is a good case of whiplash; we spend our time concentrating on the customer," Amazon spokesman Bill Curry said.