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

To: Jan Crawley who wrote (3572)	4/28/1998 10:03:00 PM
From: Glenn D. Rudolph	Respond to of 164684

April 28, 1998 Strong Earnings From Amazon Help Give Tech Stocks a Lift By JOELLE TESSLER Dow Jones Newswires Another stellar earnings report from a major Internet company -- this time on-line book seller Amazon.com -- helped the entire sector shake the previous day's poor performance Tuesday. Amazon, one of the leaders in the emerging electronic-commerce industry, blew away Wall Street estimates for its first quarter, with revenues five times those of a year earlier. "It was a startling number," said William Blair analyst Abhishek Gami. In trading on the Nasdaq Stock Market, shares of Amazon shot up 12 7/8, or 16%, to close at 95 5/8. The stock was also helped by Donaldson Lufkin & Jenrette Securities Corp.'s decision to start Amazon with a "buy" rating. Meanwhile, tech stocks performed well after a one-day sell-off on a day that saw the Dow Jones Industrial Average head south in the afternoon. In afternoon trading Tuesday, the Nasdaq Composite Index gained 11.46 to 1831.77, and Morgan Stanley's high-tech 35 index added 6.50 to 563.51. Late Monday, Amazon (www.amazon.com) said its net loss for the first period ended March 31 swelled to $9.26 million, or 40 cents a share, compared with a loss of 41 cents a share in the fourth quarter and a year-earlier loss of 16 cents a diluted share. That was seven cents per share better than analysts' consensus of a 47-cent loss, according to First Call Corp. Revenue rose to $87.4 million from $66 million in the fourth quarter and $16 million a year ago, well above analysts' expectations of about $73 million. CIBC Oppenheimer analyst Henry Blodget called the 32% sequential revenue growth "mind-boggling," given that the first quarter is a seasonally weak period. He added that the revenue growth figures are quite significant since they are "growing off of big numbers." Mr. Gami said the company appears to be on track to do $500 million in sales next year. Amazon said it ended the first quarter with more than 2.26 million customer accounts, up from 1.51 million at the end of December and 340,000 at the end of the first quarter of 1997. "This is the third-largest bookseller in the U.S.," Mr. Blodget said, "and they didn't exist four years ago." The company's size, he added, is giving it purchasing clout with publishers, which is lifting its margins. Amazon's gross margins were 22% in the first quarter, compared with 19% in the fourth quarter. The company also told analysts that it will accelerate marketing spending, which includes spending on advertising on other Web sites, such as the search engines. This may be helping to boost the shares of many of these companies Tuesday, Mr. Gami noted. He added that if Amazon increases advertising spending on these sites, "Barnes & Noble will follow." Amazon spent $20 million on sales and marketing in the latest first quarter, compared with $4 million a year earlier, Mr. Blodget said. Amazon also showed its determination to expand both beyond books and outside the U.S. The company announced plans Monday to buy three smaller companies: Bookpages Ltd. (www.bookpages.uk), one of the largest booksellers in the United Kingdom; Telebook Inc. (www.telebuch.de), a major on-line book store in Germany; and Internet Movie Database (www.imdb.com), a U.K.-based source of information about movies and television which Amazon said will eventually help it sell videos on-line. Amazon said it bought the companies for a combination of cash and stock that will cause it to incur $55 million in charges against future earnings; it expects to issue 540,000 shares of common stock as part of the purchase price for all three. With its proven track record of growth, Amazon is regarded by many analysts as one of the Internet companies with sound fundamentals -- and as a bellwether for Internet commerce as a whole. Amazon's results, Mr. Blodget said, demonstrate "just how big this market can be." On Tuesday, Amazon's results also lifted shares of some of its on-line retail competitors. CDNow rose 4 13/16 to 29; N2K climbed 1 15/16 to 24 15/16. Other big gainers in the Web sector included Excite, which advanced 8 21/32, or 15%, to 66 15/32; Lycos, which moved up 9 3/16, or 19%, to 58 3/8; and Infoseek, which rose 2 5/8 to 33. All trade on Nasdaq.