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

To: Platter who wrote (30810)	12/21/1998 9:40:00 PM
From: llamaphlegm	Read Replies (2) \| Respond to of 164684

hmmmmmmmmmmmmm glenn -- hope you're ok hjm -- trust me -- ultimately a tulip is a tulip is a .... bateman -- how's the pooch and the red baron? my my my -- what a massive collection of momo stock geniuses we have aggregated here ... patience oh FA types, patience -- I assume that once it surpasses MSFT's market cap (a term which ~10% of amzn investors are familiar with) it might slow down -- or maybe not. lp Amazon's $10 Billion Misunderstanding By David Simons Special to TheStreet.com Last week, the stock market bought gleefully into CIBC Oppenheimer's notion that Amazon.com (AMZN:Nasdaq) will earn $10 per share on $10 billion revenue within five years. But the bond market yawned. Amazon's high-yield bonds -- the 10% notes due 2008 -- didn't budge. Since Nov. 24, in fact, their price has declined, increasing the yield by 33 basis points, according to Morgan Stanley, the underwriter. Over the same stretch, however, Amazon shares have risen 34%, while the prices of high-yield bonds in general have risen, sending their yields lower by nearly 10 basis points. Essentially, the bond market is saying that it hasn't changed its assessment of Amazon's ability to generate cash flow to cover the interest -- even though payments don't begin until 2003, just when the stock market bets that Amazon will be gushing $800 million of pretax cash, or 15 times the $53 million annual interest due on the note. High-yield bonds are more sensitive to the price movements of their issuers' stocks than is higher-quality debt. But the outlooks of creditors and equity buyers aren't often at such extremes as is the case with Amazon. In addition, the notes are senior obligations, meaning payment of interest has first dibs on everything Amazon, from revenue to inventory of Dilbert dolls to Amazon's fabled plywood-on-sawhorses desks. Not even the bond's 9.63% yield -- more than twice 10-year Treasuries -- has tempted the bond market Scrooges to gain cheer from the Amazon Christmas party going on in the stock market. In August, Standard & Poor awarded the notes a rating of B - only one notch up from CCC possible default. At the time, S&P stated: Outlook: Developing Although the prospects for Amazon.com's bookselling business are promising, [the] aggressive growth, product expansion and acquisitions, combined with negative cash flow from operations, could weaken the company's credit profile, given the potential for rapid changes in its marketplace. A possible ratings upgrade will depend upon the company's ability to execute its strategies and achieve enough scale to leverage fixed costs and marketing expenses.