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

To: Bill Harmond who wrote (11721)	7/25/1998 5:59:00 PM
From: Rob S.	Read Replies (2) \| Respond to of 164684

Qtr to qtr sales has slowed. Sales look strong compared to infant year ago figures but are slowing qtr. to qtr. Covey said that Amazon.com expects falt to only modestly higher sales this quarter - the first quarter in history of the co. that they have not had large qtr. to qtr. increases. ". . . competitors are increasing presence . . . large ad campaigns are having some effect . . . B & N and Borders have revamped their sites to be more navigable . . . that didn't benefit from advertising before . . " Covey said that the effect of the competitors site revisions and advertising were now starting to impact Amazon.com. Covey told analysts, "We anticipate slower growth in future quarters and encourage you to take the same approach in building your models." In addition, Covey said " . . . lower gross margins are expected for the remainder of 1998." She spelled out the detailed impact expected on G & A, gross margin, marketing and advertising and other revenue and expense items: G & A raised to 3.2% from 2.3%, gross margins down 1%, marketing and advertising up 1%-2%. No real big moves on the revenue and expenses but overall working lower by 2-3%. The most important thing is that management admitted that they were starting to see an impact from competitors sites and advertising campaigns and that sales would be flat to only marginally up this quarter. This is not a catastrophe for Amazon.com. It should be seen as the effects of the maturing of the market and increased competition that SHOULD BE EXPECTED. The stock price has built in that Amazon.com will continue in the market with limited serious competition - just because they have faced no serious competition in the past. That is a very naive expectation upon which to risk money on the bet that three or five years from now the investment will prove to be justified. I wonder why Microsoft wasn't valued at $6.5 billion before they showed their first profits? Or why WordPerfect Corp. wasn't valued at $5 or $8 billion before they captured 70% of the word-processing market several years ago? Most people thought at the time that no one could catch them and they would continue to dominate WP and move into several other categories of products. They imagined W.P.C. could leverage themselves into other product areas easily because of their tremendous brand recognition and market momentum in the then most important word-processing software category. Seems they did try a few other products like a spreadsheet and database product, DataPerfect was it? . . . Hmmm . . . I haven't used WordPerfect myself for a few years . . wonder were they are now?