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

To: H James Morris who wrote (13892)	8/18/1998 12:30:00 PM
From: Rob S.	Respond to of 164684

You could be right about the '99 bubble pop. I think that Amazon will either trade in a range or pull down from here a bit for the short term. This will be a trading stock for a while rather than one to just buy or sell (depending on your convictions) and hold onto. Although it won't just pop, there is not much reason even for wild speculators to invest it in at this point unless they are willing to take on a lot of risk for the chance of making a few percentage points of possible gains. In the mid-term the stock could get moved by enthusiasm surrounding the Christmas buying season - but then this stock is valued on year 2001-2003 sales and earnings prospects already so what difference should a seasonal factor make? Of course, it could make a difference because it could feed further speculation. Another factor that could spur greater craziness among speculators is the rolling in of Planetall and Junglee capabilities into the Amazon.com web site. That effort could prove to be a disapointment that has little chance of producing the kind of revenue needed to support it. However, competitive efforts are just starting to heat up and Amazon.com may draw renewed attention because of the web changes. Amazon.com is expected to have slower sales growth this quarter. That could drive the price down or be ignored as speculators focus on latter quarters. However, Amazon also said that they expect lower margins, more competition and slower growth throughout the next several quarters. The fact is that growth is slowing down while costs are mounting at a rapid pace. Companies such as Bertelsman can afford to spend hundreds of millions to establish a web enterprise to compete with Amazon.com and others. They produce a large number of the books that they sell, cutting out the distributor and e-tailer margins. US publishers can be expected to be watching their rival with great interest and may be forced or inclined to follow with their own customer-direct web sites. The internet may become even more of an efficient delivery vehicle than Amazon.com ever dreamed of - cutting them out of the competitive landscape entirely. In the long-term Amazon.com may not be able to make a profit on selling books and music even if they reach what they had considered "economies of scale" that would provide profits under a previously imagined scenario. If they can't sell products at a profit, all the "brand building" in the world won't be worth the toilet paper it's written on as it will be flushed down the crapper of competitive reality. The Edsel was a great brand name that made affordable family cars at one time but they couldn't survive in the face of more efficient competition from GM, Ford and Chrysler. Now their name ranks up their with Wordperfect, CPM, and other enterprises that were squashed by more efficient corporate strategies. This won't become recognizable to the average analyst let alone speculator for several months. For the next few months the enthusiasm is not likely to drive AMZN beyond the 145 level and its quite possible to move down to the 70-90 level.