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

To: Gary Walker who wrote (23979)	10/31/1998 10:17:00 AM
From: H James Morris	Read Replies (1) \| Respond to of 164684

Gary<. Will it cause a recession???> According to Abbey Cohen and Mary Meeker. No!

To: Gary Walker who wrote (23979)	10/31/1998 11:53:00 AM
From: H James Morris	Read Replies (2) \| Respond to of 164684

Is this what you were referring to? uniontrib.com

To: Gary Walker who wrote (23979)	11/1/1998 8:49:00 AM
From: Glenn D. Rudolph	Respond to of 164684

Publication Sent from www.fool.com to all Datek Online Cusomers =============================================================== Internet Investing: Unprofitable is OK There are an estimated 40 million Americans using the Internet, or about 20% of the population. This numbers is expected to grow well over 30% annually over the next three years (beginning in 1999), following a 40% jump this uear. In 2001, it's estimated that over 100 million Americans will use this Internet. Meanwhile, e-commerce volume is expected to grow more than 100% annually into the year 2001. These growth numbers are merely estimates - they're anyone's guess. E-commerce is growing more quickly than was anticipated, though, which makes the rush for mind share (and market share) even more vital right now for Internet companies. That means spending money-and operating losses. When you consider how young the commercial Internet is, and how young all Internet companies are (while admitting that it takes time to turn any company profitable), argument against most Internet companies usually boils down to this illogical whine: "They're not making any money!" Well, duh. Of course not. This is a new industry, with new companies that are only beginning to build their businesses. The majority of start-up comanies of any type, public or private, are not profitable for a number of years anyway, often at least five. The aim right now is not for profits. In recent weeks many articles about Amazon.com have discussed the stock's valuation, mentioning the many good things that Amazon does but then slamming it as a potential investment because the company has yet to make a profit. Amazon has been public for one year, and the idea behind going public was to raise money so that it could spend it-not horde it, spend nothing more, and then quickly be profitable. Amazon could have been profitable last year if it hadn't spend any discretionary money. It probably would have had 1/10th of the revenues, though, and it would have sacrificed its future. Instead, the company spent aggressively and has built a sizable lead over the competition. Amazon (and other Internet firms) will continue to spend heavily until the benefits gained by spending diminish substantially - which will happen several years from now, when a majority of Internet users have established habits that won't easily be changed by marketing initiatives. Now is when habits are being formed, though, and you have to spend money to shape habits. If more leading Internet companies aren't making a profit in three to five years, then the Internet economy as a while will have proven to be much more challenging than anyone thought, and then the bears will have a valid argument. But until "then" happens, bears need to find a different argument, because one of these companies are even trying to make a profit. They're trying to spend enough money so that they have a future - just as this country's government spent more on its infrastructure, as a percentage of income, during the Great Depression than during most all other time periods. FDR knew that you needed to spend in order to have a future at all. In the meantime, when thinking of these stocks' valuations, a quite from The Industry Standard magazine states, "If I tought a class, I would ask, 'How much is this [Internet] company worth?' Anyone who would answer, I would flunk." This interesting remark is from Warren Buffet. It suggests that he doesn't take the Internet bears and their doomsday price predictions any more seriously than we do - because no one knows for certain. As with any industry, though, leaders will continue to emerge while hundreds of second-tier companies are likely to struggle. So rather than look for immediate profits at these companies, a potential Internet investor should look for the absolute leaders now - those with the best management and the potential to win the long-term market share. As for bears, short the third and fourth-tier Internet players if you want to short any of these companies, because we've all seen what shorting the leaders like America Online, Yahoo! and Amazon has amounted to so far: Nothing but "Ouch."