Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: MR. PANAMA (I am a PLAYER) who wrote (11425)	7/22/1998 11:27:00 PM
From: umbro	Respond to of 164684

What could go wrong at Amazon.com? By Frank Barnako, CBS MarketWatch Last Update: 08:37 PM July 22, 1998 [source: cbs.marketwatch.com ] SEATTLE (CBS.MW) -- Amazon.com's second-quarter results floated past most expectations, but the online bookseller may run into rough waters ahead, some analysts said Wednesday. "The potential pitfall for Amazonÿ is expanding into too many product segments," said Nicole Vanderbilt, director of digital commerce at Forrester Research in New York. Seattle-based Amazon (AMZN), which has seen its stock rush 600 percent higher since going public last summer,ÿ posted an operating loss of 33 cents a share vs. the 40 cents consensus estimate compiled by Zacks Investment Research. See full story. David Simons, managing director of Digital Video Investments, said he would remind management to remember it's "in the business of retailing, and each product line is its own segment of an industry." He pointed out brick and mortar retailers like Tower Records and Blockbuster have plenty of room to offer deep inventories of books, videos, computer software and music under the same roof. "But they don't because the major retailing trend over the past 15 years has been the decline of the general merchandiser and the dramatic rise of the specialist," he said. "It's not really a slam dunk. On or off the Web, Amazon has competition, Simons said, citing online music specialists CDnow (CDNW) and NTK's (NTKI) Music Boulevard.ÿ"In fact, there is increasing competition," Simons added. For investors, the question about Amazon's stock is not how high and reasonable is its valuation, but how reasonable is the risk. With the issue trading at 134, buying its shares is betting on a company not expected to show profits until maybe 2001, Simons said. "That's a bet not only on a flawless realization of heady expectations for the Internet and execution by the companies, but also that the overall market won't experience a significant decline within the next three years," he said. Forrester's Vanderbilt offered few other concerns, noting that founder Jeff Bezos and his management team have been stable, with only one high-level departure in recent months. The retailer's plans to expand into Europe are good ones, she says. "E-commerce is taking off more quickly there than it did here in a comparable time frame," Vanderbilt said. She also sees little reason for Amazon to worry about competitors Barnes and Noble (BKS) and Borders Group (BGP). Both have substantial investments in traditional retailing that inhibit their flexibility in responding to the fast-changing Internet business. Traditional retailers' online arms are "hamstrung a bit, because their spending in the Internet market is not well received," she said. Neither BarnesandNoble.com or Borders.com "poses a threat to Amazon in the near term."