>> and there was a ton of money made by michael miliken and his buddies<<
For the slap on the wrist that Miliken got, don't feel sorry for him. The last time I checked he still had $500mil.
>> New York, Dec. 23 (Bloomberg) -- While Internet retailers' fourth-quarter sales will probably top analyst forecasts, their stocks may not get a boost when it happens.
Even the analysts who make the predictions say estimates are too low; yet they're standing pat, partly to keep the e-tailers happy.
''Companies like to beat analysts' estimates,'' said Phil Leigh, an analyst with Raymond James & Associates Inc.
Most Internet companies don't have any earnings, so their high-priced stocks are judged largely on how quickly sales are increasing and by how much revenue growth surpassed analyst estimates.
Amazon.com Inc., OnSale Inc., N2K Inc., CDnow Inc., CyberShop International Inc., eBay Inc. and Bluefly Inc. all have at least doubled since Nov. 9, as investors bet on booming fourth- quarter revenue. On that date, Dell Computer Corp. released a survey that concluded that the number of holiday shoppers would more than quadruple this year.
Companies want to keep estimates low to give themselves room for making unexpected expenditures in the fast-paced, competitive industry, such as starting a television ad campaign.
Analysts are reluctant to change an estimate based on a company's guidance because they risk being wrong -- or, even worse, losing access to the company's management and to investment banking business, said Ryan Jacob, a money manager at the Internet Fund.
''There are a lot of fees being generated in the Internet sector,'' said Jacob, whose $16 million New York-based mutual fund is up 185 percent this year. ''Analysts don't like to rock the boat. They have to maintain a good relationship with the company.''
No one accuses Amazon.com of low-balling sales estimates -- the bookseller refuses to help analysts on that score. N2K said it gives analysts updates during each quarter. Onsale Inc., CyberShop International and eBay Inc. officials couldn't be reached for comment. CDnow declined to comment on whether it gives guidance on sales to analysts. No analyst covers Bluefly.
Booming Sales
Holiday sales from the Internet are expected to reach $2.55 billion, three times the amount spent during the same period a year ago, according to market researcher Yankee Group. Internet retailer CyberShop crowed that visitors to its site were up 400 percent from a year ago. Amazon.com reported orders the day after Thanksgiving rose fourfold from those on the same day the year before.
Even impressive fourth-quarter sales numbers may not help Internet stocks, which already reflect high expectations, said the Internet Fund's Jacob.
''As we see companies report (sales in January), the ones that will do exceptionally well will see their shares advance,'' said Jacob. ''Those that don't could see serious corrections in their stock prices.''
Setting the Bar
That's what happened to online music retailer CDnow in the third quarter. It reported sales of $13.9 million, about $1 million short of estimates. Its stock dropped 6 percent in the two weeks following the earnings release, compared with a 16 percent gain in the Inter@ctive Week Internet stock index during the same period.
Analysts are keeping sales estimates low for Amazon.com and Onsale, although they could be among the biggest beneficiaries of this year's boom in Internet shopping.
Leigh, who rates Onsale ''accumulate,'' said he's convinced the Mountain View, California, company that sells everything from computer goods to sports equipment through live auctions on its Web site, will get a ''significant'' boost from the strong Christmas e-tailing season on the Internet.
Yet he's sticking with an estimate of $63 million to $64 million in revenue, a small increase from Onsale's $58 million in third-quarter sales. He bases his prediction on information he received from Onsale. ''I have not been encouraged to change my estimates by the company,'' he said.
Books and Cameras
Analysts are also being conservative with their estimates for Amazon.com, the No. 1 online book and music retailer, which has been expanding its line of products. Amazon.com opened an online holiday gift store and Web shopping referral service in the last two months, enabling shoppers to buy everything from Tom Wolfe's new novel for $17.37 to a digital camera for $500.
The Seattle-based company's fourth-quarter loss is expected to widen to 54 cents a share from 23 cents.
''Revenue between $250 million and $300 million is not out of the question'' for Amazon.com's fourth quarter, said Jacob. Still, analysts are keeping their revenue forecast for the retailer at about $175 million, slightly more than 2 1/2 times' last year's fourth-quarter sales.
''Everyone here is of the mind that they are going to do better than what's on the printed page,'' said Lauren Levitan, an analyst at BancBoston Robertson Stephens.
Still, she said, ''The range of outcomes in these stocks is so huge, it's healthy to be conservative in this arena.''
One company's candy cane could end up being another's lump of coal. Amazon.com is eating into music sales at CDnow and N2K, said Friedman, Billings, Ramsey analyst Robert Martin.
''It looks like (N2K) will be in line with expectations, but I'm not sure if they'll blow them out,'' said Martin, who expects N2K to have sales of $16.2 million.
Predictions about Internet stocks are riskier than most, of course, and the shares all might rise no matter how the fourth- quarter sales estimates stack up.
08:03:28 12/23/1998<< |
