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To: H James Morris who wrote (4150)	5/10/1998 2:45:00 PM
From: H James Morris	Read Replies (2) \| Respond to of 164684

I copied this from SI yhoo, is this guy a Amzn bull or what? Why don't the bulls post here on the Amzn thread? To: PeterGx (10783 ) From: William Harmond Sunday, May 10 1998 1:16AM ET Reply # of 10787 I didn't get through to the link, but from what you posted I think it's right on. The most important thing about this market to me is that participants are willing to discount earnings out farther than ever before because the net flow of funds is so strong. I think it was the president of Prudential Securities who said recently that unlike previously (as in "it's different this time"), investors in the market have long time horizons. In the 60's and 70's people took profits to buy things. This time investors have a retirement time horizon, and are not cashing in their mutual funds. When an opportunity like Yahoo comes along in an environment like this, the market can look farther over the valley. Tried and true valuation formulas don't seem to apply as well, because there is a reasonable comfort factor paying up for expensive "athletes"...companies addressing huge business opportunities that are growing off small bases at explosive rates and have big leads over their competitors. As long as the flow holds up, there is really no other choice but to buy these issues "now", because a cheaper price is less likely to come along. Throw in Americans' worship of all things technological and the startling operating efficiencies created through Internet commerce and you get the current platinum-plated relative valuations in the category-leadership companies like Yahoo, AOL, @Home, DoubleClick, VeriSign, and Amazon. In the latest edition of the DLJ Internet Observer (I suggest everyone subscribe...it's entirely free) the staff compared the operating differences between Amazon and Barnes & Noble. It really opened even this bull's eyes. While most consider B&N a more solid investment because of its "reasonable" valuation and leading chain of real bookstores, it became clear to me just how handicapped B&N is compared with Amazon. I didn't know that B&N takes its inventory on consignment (resulting in extra cost per book), or pays publishers extra for display book jackets and other promotional goodies. I didn't know that B&N's inventory turns are only 1/4 Amazon's turns. Net net is that Amazon and B&N are really two completely different businesses...even without giving Amazon points for customer tracking and subject affinity promotion on the portals. This is all long-winded, I know. But we live in a time of both important commercial change and sustained positive investment. Capitalizing on change has always been the best way to make money in stocks. I think we have to follow that rule even if the market is keeping general valuations at historically high levels.

To: H James Morris who wrote (4150)	5/10/1998 3:01:00 PM
From: H James Morris	Read Replies (1) \| Respond to of 164684

Feature Page! Online Shopping Overview ÿÿÿÿÿÿTop online shopping sitesÿfrom home and from work. FORECASTS:ÿÿÿ ÿ ÿÿÿ"We feel pretty confident--given the anecdotal data from America Online, BarnesandNoble.com, and others--that not only did we reach $1 billion in sales around the holiday but most merchants are continuing to grow as a result of the surge around the holidays," said Jupiter Communications' Nicole Vanderbilt. ÿÿÿÿ"It's now a momentum story," said Kate Delhagen of Cambridge, Mass.-based Forrester Research, "People are willing to buy books and CDs and apparel, which are all easy items to buy. I see a steady stream of business month-to-month. We believe that the online retail market will grow from $2 billion in the value of goods sold during 1997, to more than $17 billion in 2001. Our model forecasts growth for 15 consumer categories and identifies nine that will break the $100 million mark by 2001." ÿÿÿÿYankee Group, based in Boston, projects that consumers will spend upwards of $4.9 billion on the Web in 1998, and nearly $10 billion by the year 2000, according to analyst Melissa Bain. Yankee Group also expects 16 million households to spend an average of $550 annually online by the year 2000. ÿÿÿÿIDC (International Data Corp), based in Framingham, MA, estimates that by year 2001, 40 million households will be on line, up from 18 million in 1997. "It's reaching mass-market proportions," said Jill Frankle, senior analyst with IDC. "I think '98 will be another big year." ÿÿÿÿActive Media, based in Peterborough, New Hampshire, estimates that in 1998 (business and retail) web generated revenues will be worth $24 billion. "At current growth rates, total web business volume should reach $1 trillion by 2001," said ActivMedia's research director Harry Wolhandler. ÿÿÿÿAnderson Consulting, Chicago, expects that households will spend as much as $85 billion for groceries and related Items within 10 years. 200,000 households are now buying food and household goods online today, but by 2007 that number could hit 20 million. ÿÿÿÿJupiter says music and related items purchased over the Internet are projected to exceed $1.6 billion in 2002, up from $18 million in 1996. The market research firm also estimates that over 50% of U.S. households will be online by the year 2002. ÿÿÿÿWeb may overtake mail order catalogs In 3 To 5 years, according to Gordon McComb, author of Web Commerce Cookbook. HISTORICAL METRICS:ÿÿ ÿÿÿÿIn December, 1997 CommerceNet and Nielsen Media Research reported nine million people have made a purchase via the Web, a 60 percent increase since March. Media Matrix added its Net usage tracking research shows visitors to shopping sites have risen 55 percent this year. ÿÿÿÿIn 1997 online consumers bought $2.74 billion in goods and services, up from $730 million in 1996. $800 million of 1997's sales came during the holiday season. ÿÿÿÿYankee Group said that 5.2 million U.S. households shopped on the Internet in September and October, 1997, compared with 3 million in the same period in 1996. ÿÿÿÿ36.9 million PCs in the U.S. regularly connected to the Internet in August, 1997, according to Dave Tremblay, senior analyst at La-Jolla, California-based Computer Intelligence. OBSERVATIONS:ÿ ÿÿÿÿIn the Internet book market, Amazon.com has 2.5 million titles and BarnesandNoble.com as upwards of 1 million titles, both outdistancing their competitors. ÿÿÿÿIn the Internet music market there are a number of companies in the 150,000 to 250,000 title range, so broad selection is less of a competitive factor. CDnow has 250,000 titles, N2K has 200,000. ÿÿÿÿBorders Music & Books, Crown Books and Tower Records are all expected to go online during the first quarter of calendar 1998. ÿÿÿÿEntry barriers include: brand image and ability to generate web traffic, product selection, funding for advertising contracts, on-line advertising placement (Yahoo, AOL, Excite, GeoCities etc.), customer satisfaction ratings, customer base for repeat business. ÿÿÿÿHere's how an established company, such as Best Products, enters the market using partnerships: ÿÿÿÿ(1) New York-based Muze provides music database information, sounds technology comes from Seattle-based Enso Audio Imaging, ampling tintegration assistance is from Chantilly, Va.-based AT&Technical and Solutions, and order fulfillment is from Valley Record Distribution of Woodland, Calif. Best Buy uses Microsoft's commerce server, Merchant Server. ÿÿÿÿ(2) The online store is offering (as of January, 1998) more than 100,000 music CDs. The retailer said it will soon expand the list to more than 160,000 titles, including classical music discs, to put the Best Buy site on par with online retailer CDNow, which began selling music CDs online in 1996. ÿÿÿÿ(3) Additionally, Best Buy recently began to offer commercial and government customers an online option for opening new accounts, an online application (with instant approval) for the Best Buy credit card, and a SpecSource database of the specifications of all the products sold at Best Buy. ÿÿÿÿOn-going brand loyalty may be questionable -- with non-differentiated product lines. ÿÿÿÿEqually questionable is when and if ANYONE will ever make money, because because as soon a profits are in sight, more money needs to be spent on advertising. ÿÿÿÿHowever, "leader" companies may show stock increases, regardless of operating losses, because of expected sales growth in the category, quarter-to-quarter. FINANCIAL COMPARISONS:ÿÿCustomer Satisfaction RankingAccum. Deficit (millions). Sales (millions)Gross Margin (%)Operating Loss (millions). Search/Content "Partners"Amazon.com (books) 9/30/97 quarter 10/31/97 quarter Projected 1998 revenue Breakeven revenue4th of 19 . . . .<34> . . . .. 36.8 66 288 440. 18.9 19.6 . ÿ.. <9.2> <9.6> . .Yahoo, Excite, AOL, GeoCities, Netscape, @home, Exciteÿ .N2K (music) 9/30/97 quarter 12/31/97 quarter Projected 1998 revenue Breakeven revenue2nd of 13 . . . .<50> . . . .. 3.5 4.7 60 150. 18.9 .. <7.0> .AOL, Excite, Netscape, MTV Int'l . .CDnow (music) 9/30/97 quarter 12/31/97 quarter Projected 1998 revenue Breakeven revenue1st of 13 . . . .<11> . . . .. 3.9 7.9 . .. 17.6 14.0 . .. <2.6> <6.4> . .Yahoo, Excite, GeoCities . . .Source -- see Research links. In customer satisfaction BarnesandNoble.com ranked one slot above Amazon.com.