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

To: H. Lee Grove Jr. who wrote (11502)	7/23/1998 1:14:00 PM
From: Rob S.	Read Replies (1) \| Respond to of 164684

This is one area that I must admit to have not done enough work on. The company is very hard to get absolute numbers out of. They have issued more stock in the acquisitions and early stage of options that they haven't bothered to keep tract of. They mentioned that another 1.5 million or so would be open for trading soon but gave no suggestion on if it would be sold. That decision is in individuals or other company's hands. One message that came across to me very clearly was that management is intent on building a business that can survive the onslaught of competition. Speculators have this company pegged all wrong. They have been able to grow rapidly because they were early innovators and filled a void. Now that void is becoming much less of an open playing field and will soon be crowded with very capable companies all fighting for their piece of the pie. Amazon.com has overly emphasized growth over stability and staying power but appear to be starting to change that. As they do the costs will increase and margins will continue to be under increased pressure from competition. Still, I wish them well as they start to set more realistic goals - I expect those goals will become more and more conservative as the market matures. One thing about the e-commerce phenomena; events are happening in "internet time". This is a much faster pace to business events than any other phenomena that has gone before it. Early market recognition and sales momentum are more tenuous than analysts and bulls realize and can quickly diminish in value. Think back about three years ago when Netscape was riding high as the company sure to dominate that internet. Analysts and trade journal pundits at the time were admonishing how Microsoft had missed the boat entirely. Some suggested that Microsoft would go down in ashes because they would be unable to compete in the new environment. Navigator had about an 80% market share and broad brand recognition and the un-dying loyalty of internet users at the time. What has happened to that "undying loyalty" now? Many people thought that the spirit and early high growth rates and loyalties would survive any possible degree of competition from the much larger Microsoft. No one would dare suggest that Microsoft was a threat of a monopoly on the internet. Then Microsoft started giving away their browser and bearing their resources down o the competition. I think that there are many similarities between Netscapes early position and where Amazon.com is at today. The competition has taken notice and is starting to compete effectively. The bull speculators suggest that Amazon is unstoppable and that competition just doesn't matter because of the power of brand recognition that Amazon.com is "buying" through heavy losses. Just as fleeting as the brand loyalty given to Netscape, many internet shoppers will be more than willing to shift away from Amazon.com at the drop of a good deal. sure Amazon.com will retain many loyal customers, but future profits will be increasingly hard to come by. The expectation that they will earn a profit in the year 2001 will get pushed back soon to the year 2002 or 2003. The loses will mount in the mean time. We have just started to see the growth of on-line competition and who knows who will come out on top. I doubt that any firm will make the fat profits that is propelling the entire group higher. Maybe the portal companies, but even that area will find increasing competition. Jeff Bezo said that he expects there to be many, many new portal companies entering into competition over the next few years. I agree. And ditto that for booksellers and other merchants. The internet is basically a multi-point to multi-point technology. That is the underlying structure that will determine the way the technology evolves and competition.