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

To: FrankInNYC who wrote (2621)	4/1/1998 8:11:00 AM
From: Gary Korn	Read Replies (1) \| Respond to of 164684

Frank, Thanks for your comments. I've no idea when the bottom will fall out from under AMZN. But I'm short now for several reasons. Some of them are: 1. Unlike other internet stocks in the current frenzy, AMZN's business has essentially no barriers to entry. I could start selling books on a web-site if I wanted to. 2. Hence, there can be, and there is, intense competition in this market: BKS, Borders, Random House, Wal-Mart, etc. Plus, there are now (or soon will be) engines that search for the best price across web-sites. 3. The on-line book selling market is not limitless. The rate of AMZN's growth will slow, as they said in their 10K. 4. AMZN, per the 10K, will lose money "for the foreseeable future." At some point, that kind of statement does not justify a market capitalization of $2Billion. Other booksellers that actually make money have a far lower ratio of price to sales. 5. AMZN's new $75MM loan is an albatross. I can't figure when interest payments are due, but the full loan is due in less than 33 months. Given losses for the foreseeable future, you might expect stock dilution when they authorize and issue more shares to pay for the debt. 6. Declining margins with increasing revenues. 7. Yes, given the small float and high short interest, there can be a squeeze up. But at some juncture the bubble will burst. Among all the bubbles out there, this one seems the easiest to identify, as AMZN is, in the end, just an online bookstore. Gary Korn