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

To: Bill Harmond who wrote (18492)	9/25/1998 5:04:00 PM
From: craig crawford	Read Replies (1) \| Respond to of 164684

Please explain.

To: Bill Harmond who wrote (18492)	9/26/1998 3:33:00 PM
From: Glenn D. Rudolph	Respond to of 164684

I wonder how Mary Meeker fits in with AMZN: BEWARE INVESTMENT-BANKING LINKS The first question to ask about any recommendation is if the analyst's firm is also the investment banker for the company. If so, that will appear in the fine print on a brokerage firm's report. If you hear about the recommendation by word of mouth or the media, dig deeper by calling the analyst's firm or the company's investor-relations department. Be especially wary of early recommendations in the case of initial public offerings. The first recommendations usually come from the firm or firms that lead the underwriting. Kent L. Womack, a finance professor at Dartmouth College, says these bullish reports from the investment banker's analyst are usually issued when the stock is below the offering price. ''That's why we call them booster shots,'' says Womack. If an IPO starts to look like a winner, other analysts will start coverage. Womack studied stock- price behavior on the day buy recommendations were issued. Buys from analysts uninvolved in the underwriting resulted in a 3.5% price gain vs. a 1.5% gain for those from the underwriter's analyst. DECIPHER THE RATINGS Some firms use a simple three-part rating system--buy, hold, and sell--but most embellish it. Robert S. Harris, a business professor at the University of Virginia, says adding gradations gives analysts ''wiggle room'' to avoid negative recommendations. Some, like A.G. Edwards & Sons and Merrill Lynch & Co., use a five-rung ratings system: two levels of buy, a neutral, and two levels of sell. Many more stocks earn top grades than the bottom. Right now, 543 of 3,825 Merrill Lynch analyst recommendations are in the top rating. Only eight have an outright sell. Some firms, like Morgan Stanley Dean Witter, use a four-part system: strong buy, outperform, neutral, and underperform. Notice that the system gives more prominence to telling investors to buy than to sell, which is couched as ''underperform.'' It means the same thing. Who wants to hold a stock that's expected to be an underachiever? At first blush, a hold, or ''neutral'' or ''market performer'' doesn't sound so bad. What's the harm in holding it, especially if the company is still sound? Maybe no harm if you're a long-term investor. But in the short run, the stock may get clobbered. Institutional investors may dump the stock. Their goal is to beat the market, so they can't afford to hold on to a stock that's only expected to match it. That's why many pros consider a hold to be a sell. WATCH FOR DOWNGRADES With Wall Street's bullish bias, any downgrading is bad news. Harris says downgrades have a far greater negative impact on stocks than upgrades have positive. Even moving from the highest to next-highest rating can trash a stock. Big institutional investors know the analysts' pronouncements are not always what they seem. But unlike individual investors, they often meet and talk with analysts. ''A wink, a nod, or some other body language tells more than the report,'' says Kevin Landis, portfolio manager of the Firsthand Technology Value Fund. ''It's the individual investors who are most susceptible to misreading the ratings,'' says Bill Gurley, an ex-technology analyst, now a partner at Hummer Winblad Venture Partners. But if the individual knows how to look under the company's financial hood directly, chances are he or she will come a lot closer to getting the professionals' edge. Glenn