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

To: Raiders who wrote (18508)	9/25/1998 9:42:00 PM
From: llamaphlegm	Respond to of 164684

From TMF Subject: Other Suggestions for Long-Term Bulls? Number: of 7756 Author: RJMason no profile \| no interview Date: 9/25/98 9:05 PM I have been trying to think of additional ways to make money, assuming one has a long-term bullish outlook on Amazon.com. What do we mean by a bullish outlook? Well, based on history we expect a roughly 20% annual return from a Foolish Four approach, so it is only Foolish of us to be holding Amazon stock if we reasonably expect a 20% annual return. The Foolish Four are mature companies, though, so more optimistically, we could hope for Amazon to deliver the 45% annual return of the FoolPort to date. (It's probably too much to hope that Amazon stock will maintain its current 400%+ annual growth!) Let's assume that Amazon stock averages only 20% annual growth over the next five years, and that over that time the company's earnings catch up so that it has a P/E somewhat comparable to other large retail companies. If bookselling is still Amazon's core business (though not, of course, its only business), a rough calculation indicates to me that in five years Amazon will have captured the entire book market. I don't mean just Borders and Barnes&Noble -- they are small potatoes. I mean every book club and every low-price warehouse and every used book store will be history. Amazon will sell every book in the United States and probably every book in the English-speaking world. Amazon bulls know, though, that Amazon is not just a bookseller, thus potentially justifying FoolPort-level growth of 45%. After just five years of that, Amazon should have acquired not only the entire book retail industry but one or two other industries of comparable size. But enough about Amazon's bright future. What I have been wondering is, what other investments make sense in light of a bullish stance on Amazon.com? The most obvious idea is to sell short Borders and B&N, since given the most conservative scenario above, both of those companies will be trading around 0 in under five years. This will not be quite as profitable an investment as Amazon stock itself, but it might be less volatile and a 100% profit in five years is nothing to sneeze at. Since farsighted Fools expect Amazon to expand into many other retail markets besides books, at some point it might also make sense to short other retailers (Gap? Home Depot? Sears?) that will ultimately be hammered by Amazon. What about a ten year time horizon? Computer hardware and telecom companies will be obvious beneficiaries of the Amazon era, as it becomes harder and harder to buy anything without a modem. It is tempting to invest in delivery services like FedEx and UPS, but unfortunately Amazon appears to use only the US Postal Service so far. Gasoline prices may be somewhat depressed after people stop driving to the store, so it may not be a good idea to hold oil companies. Construction companies will also suffer when no one wants to build malls or retail shops any longer. What am I missing? I hope Amazon bulls can come up with some more Foolish suggestions. If you accept that (a) Amazon stock will give a good return over the next ten years and (b) earnings will catch up with prices -- in other words, if you are not a bear -- you will realize that Amazon is going to singlehandedly reshape the economy of the world! Fool On! Richard Mason

To: Raiders who wrote (18508)	9/25/1998 9:55:00 PM
From: llamaphlegm	Read Replies (2) \| Respond to of 164684

Though I realize that this board has become a trader's bulletin board (ah, how i yearn for the days of FA folks!), this might be of interest to some. cbs.marketwatch.com I want my CDNOW Music to our ears: online tunes By Rebecca Lynn Eisenberg, CBS MarketWatch Last Update: 3:38 PM ET Sep 25, 1998 NewsWatch SAN FRANCISCO (CBS.MW) -- What mainstream retail market could be better suited for e-commerce than music? At $12 billion in size, the retail music business is comprised primarily of digital products that eventually, most believe, could be distributed online. And, although online music purchases in 1997 totaled only $37 million (comprising a mere .03 percent of the whole), New York-based Jupiter Communications estimates that by 2002, the online retail music market will mean $1.15 billion to the players who have established a stake. Not surprisingly, battles among music e-tailers have already begun. One merchant, fortunately, understands the e-commerce promise: by marketing directly to shoppers things that they want, Net technology both helps buyers buy and helps sellers sell. CDNow Inc. (CDNW), having been first to the Web, has consistently led the market and currently accounts for one-third of the pie. The 4-year-old music-only merchant now faces steep competition not only from familiar rival N2K's (NTKI) Music Boulevard, but also from online powerhouse Amazon.com (AMZN), which added music to its retail offerings in June, not to mention from the impending threat of offline staples such as Tower and Musicland. But if the recent news from its Jenkintown, Penn., headquarters is any indication, CDNow gets the Net, and its future looks bright. Not only has the e-tailer recently inked deals with Yahoo, MTV, Lycos and Movielink, but this week it launched the best one-to-one marketing product the commercial space has yet seen. My CD, well, now Called "My CD Now," the company's innovation passively creates personalized music stores for each of its 600,000 customers. The technology's features include low-exertion means to edit music preferences, reasonably-effective intelligent-agent-driven music recommendations, online address books and rolodex features, and -- best of all - - the ability to create not just "wish lists" for future purchases, but also (at last!) publicly accessible gift registries. Experts approve. "I like the idea of being able to customize your retail experience," said Ken Cassar, digital commerce analyst at Jupiter Communications. My CD Now, he said, "truly leverages the things that the Web, with its the databased, hyperlinked nature, is good at." In particular, said Cassar, CDNow's promotion of an "electronic rolodex" resembles the Web-based calendar- and contact-list functions that Amazon.com acquired when it purchased PlanetAll. Although Amazon has not yet integrated the database-driven technology into its Web store, CDNow appears set to use its own version, giving the e-tailer a leg up on the calendar-driven gift market - - a market which, Cassar said, "online merchants have been overlooking." In fact, said Cassar, the potential value to consumers and merchants both is so great, that "Gift registries are going to be the next e-commerce killer app." In registry-fervor, Cassar has good company. Michael Sippey, consultant at Internet consultancy Viant, has boosted for years the business model of a "universal gift registry -- not just for weddings, but for every [gift-giving opportunity]." Why? Customers love wish lists and registries, said Michael Krupit, CDNow's VP of Technology and Creative Services. And from the company's point of view, "The one to one marketing that you get with personalization like this is unquestionable. It improves our ability both to promote the merchandise and to give people what they want to buy, thereby increasing revenues." 600,000 stores in one blow For example, said Krupit, "You can go to Amazon.com's home page, and get blasted with the Titanic or Clinton videos, which is not necessarily something you want to buy. Or you can come to CDNow, and see the sorts of things that you want to buy. CDnow is no longer one music store; it is 600,000 music stores with each customer having a different experience." CDNow wants to know you. And to most shoppers, that will be music to their ears.