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

To: Jan Crawley who wrote (11442)	7/23/1998 1:04:00 AM
From: Bill Harmond	Respond to of 164684

Bingo. Forgot about the intervening split.

To: Jan Crawley who wrote (11442)	7/23/1998 1:56:00 AM
From: Rob S.	Read Replies (2) \| Respond to of 164684

This may be important. Jan & all, I'm back - nothing like some simple lemonade on a hot summer night (a wee touch of vodka doesn't hurt). "And now the rest of the story" - I saved the best for the last; Tony Blake, didn't get the firm, questioned why inventory levels had moved up over 50% from last quarter but margins had not improved. He said that the expectation in his model was for the margins to improve as the company increased inventory levels, thus reducing the reliance on paying out for the distribution costs. Covey responded that Amazon expects to see "not much benefit" from handling the inventory themselves. Caching, there goes the argument that margins will improve significantly as they move to their own distribution facilities that are absolutely necessary in order for the company to grow and remain competitive. Bezo stepped in to say that the main reason for increasing inventory levels was to provide faster service on popular titles that could run into supply problems otherwise. Covey said that the company needs to make major investments for increased facilities in Europe and in North America. Some of these expansions will include something I mentioned back several days ago - redundant sever facilities to insure against access and natural dissastor or other service interuption problems. Dell computer, Compaq, Excite and many, other major vendors have already invested millions in providing these facilites. $$$$$$$$$$$$$$ Here is the main thing I'd like to see the media pick up on that has not been covered anywhere that I am aware of (not even on the web); Covey said that Amazon.com expects only flat to slightly increased sales for this quarter To my knowledge, this is the first time that Amazon.com will not achieve large rates of sequential growth. To go from over 33% sequential growth from 1st qtr to this past one($87 mil to $116 mil) to near zero growth is the most dramatic piece of news likely to hit this stock this quarter and, from a growth perspective in Amazon's history. This clearly signals that the huge growth rates experienced by the start-up company are not sustainable as the company grows larger. This is why both Bezo and Covey warned that is was "extremely unlikely" that Amazon would maintain past growth rates. I do not expect sales to slump this dramatically into the fall/winter quarter. The main reason given for this was that ad and promo programs were expected to reach more of a steady state and that summer is normally seasonally down due to vacations and other interests outside of book reading. That makes sense but some people do read books while lounging around the pool. $$$$$$$$$$$$$$$$ Amazon.com may get hyped up in the coming days as large investors and institutions push the brokerages to help them unload their overhang. My advice is to sell short on any significant move up. The same irrational behaviour that has moved the stock to this level may continue to propel it further. This creates, IMO, a prime opportunity for profit. I doubt that Amazon.com will move down to prices that are based on prospects for earnings for the next couple of years. That doesn't matter. The stock should move down dramatically even though still based on 3-5 year out earnings expectations.