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

To: zTrader_77 who wrote (933)	12/7/1997 1:45:00 AM
From: zTrader_77	Read Replies (3) \| Respond to of 164684

Interesting extract of article from Bloomberg - Dec 5, 1997 BN 12/5 Amazon.com Asks Investors to Read the Future: Company Spotlight Amazon.com Asks Investors to Read the Future: Company Spotlight Seattle, Dec. 5 (Bloomberg) -- Amazon.com Inc., the online book retailer that calls itself the Earth's Biggest Bookstore, shows that the word ''Internet'' works wonders. Named after the Amazon River, the Seattle-based company expects millions of consumers to scan its online catalog of 2.5 million titles and make purchases from home with the click of a computer mouse. That's why Amazon's stock was one of the hottest initial public offerings of the year, rising threefold since May. Investors who see nowhere for the stock to go but up may want to think again. There's scant evidence that droves of people want to buy books online -- and if they do, money-losing Amazon may not be the service they use. ''Most people won't give up on bookstores,'' said Giovanni Zocche, a software consultant at Bora Ventures. What's more, if online book buying takes off, Amazon's advantage of being first could quickly disappear as bigger, better-financed book retailers muscle their way into Internet selling. Barnes & Noble Inc. is beefing up its online site, which opened in May, and Borders Group Inc. plans to open its site for business in January. The two retailers lead the $25 billion U.S. book-selling industry with their chains of supermarket-size stores. ''There's already a battle,'' said Hambrecht & Quist LLC analyst Genni Combes, who has a ''buy'' recommendation on Amazon. Not Shy While Amazon executives won't say when or if the company ever will make money, Barnes & Noble isn't shy about discussing its online service. The New York-based company expects sales of $100 million to $125 million in 1998 and turn a profit in 1999, said Chief Operating Officer Stephen Riggio. ''With Barnes & Noble's nameplate, they'll be able to gain at least as much market share as Amazon,'' said Blackford Securities analyst Jason Klein, who rates Barnes & Noble a ''buy.'' There's no arguing with Amazon fans on one point: The stock is the equivalent of a bestseller. Since going public at $18 in May in a $54 million IPO, the shares have soared and recently trade at about 54. The stock closed at a high of 66 on Oct. 29. At recent prices, Amazon has a market value of about $1.29 billion. Not bad for a company with $90 million in sales in the past four quarters. Compare that with Barnes & Noble, with a market value of $2.2 billion and sales of $2.71 billion -- and a profit to boot. Selling More, Losing More Started in 1994 by former Wall Street money manager Jeffrey Bezos, Amazon's plan is to boost sales rapidly, helping it cover fixed costs. Then, once sales are high enough, demand the same discounts its bigger rivals get from publishers. ''It's a scale business,'' said Amazon Chief Financial Officer Joy Covey. Yet, the company's losses are expected to widen as its sales increase, mainly because of high sales and marketing costs. Indeed, third-quarter sales shot to $37.9 million from $4.2 million a year earlier, yet its loss more than tripled to $8.5 million from $2.4 million. Oddly enough, Amazon has higher overhead costs than its rivals, which must pay for hundreds of stores, vast inventories and thousands of workers. Amazon has about 19 cents left from each $1 in sales, while Barnes & Noble holds onto about 35 cents and Borders keeps about 25. Story Telling Many investors aren't all that concerned with the numbers, said consultant Zocche. ''They get excited by the story,'' he said.