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

To: IceShark who wrote (21343)	10/12/1998 11:57:00 PM
From: brian z	Respond to of 164684

AMAZON.COM- CAUGHT IN A SQUEEZE PLAY? This was not a week to remember for Jeff Bezos. Bertelsmann AG, the world's 3rd largest media group, ended weeks of rumors and officially announced that they had made a $200 million investment in barnesandnoble.com, the online unit of books retailer Barnes & Noble. B&N is currently the largest book retailer in the U.S. Bertelsmann currently controls recording powerhouse BMG Entertainment as well as #1 U.S. book publisher Random House. Bertelsmann is also AOL's joint partner throughout Europe. On top of this, Bertelsmann enjoys a similar partnership with Lycos Europe. Obviously, Bertelsmann's world wide online and offline relationships will immediately provide a dramatic boost to barnesandnoble.com's promotional efforts. Bertelsmann controls numerous radio, TV networks, and other print media properties throughout Europe. The company also announced plans to continue with the launch of their new BooksOnline site throughout Europe in mid-November. This deals appears to make perfect sense for Bertelsmann. Clearly, the German media company realized that their name, particularly BooksOnline, was a virtual unknown to U.S. consumers. On the other hand, B&N enjoys strong brand recognition among the U.S. public. For B&N, this marked an essential cash infusion and monumental partnership that was sorely needed for the company to have the proper resources to compete with online upstart Amazon.com. It still remains to be seen, however, if B&N can really get their act together online. Numerous reports still indicate that Amazon.com is much quicker to respond to web sites' requests to join their affiliate program. And it's no secret that Amazon.com has been much more aggressive in spending millions to lock up prime virtual real estate on many of the Web's largest portals. On paper, at least for the time being, Amazon.com still kicks barnesandnoble.com around the block. Amazon.com enjoyed sales of $116 million in the quarter ending June 30. In comparison, B&N's online unit reported sales of $22 million for the six months ended Aug. 1. Clearly, barnesandnoble.com still has substantial ground to make up in the online bookseller market. Estimates peg Amazon.com's current market share of the online market at between 65-80%. So why then did Amazon.com shares slide immediately after this announcement? From a valuation stand point, Bertelsmann's $200 mil. investment in barnesandnoble.com values the company's online unit at around $400 mil. Internet darling Amazon.com, on the other hand, sports a market cap of around $5 billion. Amazon.com currently also trades around an expensive 17 times sales. Amazon.com must also now contend with B&N's powerful new publisher-retailer relationship with Bertelsmann. Bertelsmann flatly denies that they will cut any type of favorable book deals with Barnesandnoble.com. But the question still obviously remains- will Amazon.com surprisingly find themselves now continually beat on price- particularly on titles published by Random House? Thomas Middelhoff, CEO of Bertelsmann maintains that they will still "have an arm's-length policy." We shall see. But the increased competition and potential pricing pressures for Amazon.com doesn't end there. Large online music retailers N2K and CD Now were both in talks this past week to discuss a possible merger. The combined entity would have a 45% share of the online music market and would have had sales of approximately $21 million for the previous quarter. These talks definitely do not come at the best time for Amazon.com. Particularly when Amazon.com is still trying to establish their own relatively young online music operations. Besides N2K and CD Now, competitors such as Columbia House, and Sony are bound to boost their marketing budget online for 1999. And what about Amazon.com's rosy plans to soon expand into also selling videos online? The online video retailing market also appears to be heating up. Online video retailer Reel.com was recently purchased by Hollywood Video, the U.S.'s second largest video retailer. One can expect that the new financial backing of Reel.com will pose a serious threat to Amazon.com in this market for the near future. Let us also not forget about video retailing giant Blockbuster. So far, Blockbuster has been virtually non-existent on the Web. But when the sleeping giant does to decide to wake up to the online world- look out. The most interesting quote for the past week surrounding this deal came from Bertelsmann board member Klaus Eierhoff who added: "If you just add up the sales of Barnes & Noble and Bertelsmann, then sure you could ask 'Who is Jeff Bezos?'" But obviously Eierhoof realizes that there is much more to winning the online bookseller war than simply superior offline sales. Eierhoff estimated that the move to #1 online "will be a damn long, difficult and expensive journey." You don't have to tell this to Jeff Bezos twice. He's already seen his share price slide from an all time high of 147 to 91 3/16 on Friday. I suspect Bezos is mumbling a similar phrase to himself in Seattle this weekend

To: IceShark who wrote (21343)	10/12/1998 11:59:00 PM
From: Mark Fowler	Read Replies (1) \| Respond to of 164684

Yeh guys all i'm saying it very tricky in here on this stock right now. Today was easy money wish i was here to trade it. I see most of you think it's headed down tomorrow. I'll revise what i said. Tomorrow Amzn will v down a bit and the next day should be up. I rechecked the shorter term charts on Amzn and it does look like it'll be down tomorrow. Looks like we could come down to about 85 if 90 doesn't hold. Does any other TA guy out there agree?