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

To: IceShark who wrote (32526)	1/5/1999 9:18:00 AM
From: UFGator93	Read Replies (1) \| Respond to of 164684

This is from Briefing.com. I apologize if it has already been posted as I don't have time to keep up with this newsgroup all the time. AMAZON.COM (AMZN) 354 15/16. Is this press release management or good news? Before the open Tuesday, Internet retailer Amazon.com (AMZN) put out a press release highlighting sales growth this past quarter. AMZN says they added 1 million customers and that sales quadrupled from the prior year to about $250 million this year. AMZN took no time to do the math for us, noting that annualizes to $1 billion. The press release also has more flair than most companies use in their press releases, as it noted that customers "purchased enough videos, DVDs, CDs and books to fill a shelf 101 miles long." But did they make any money? The last substantive paragraph warns not to expect too much: "these higher seasonal sales will not translate into correspondingly lower net losses in the quarter" due to lower margins, aggressive pricing practices, and higher fulfillment expenses (cost of getting the job done). In other words, they sold a lot more, but still didn't make any money doing it and this quarter's loss won't be smaller than expected just because sales were so strong. This raises the question that has long been asked about AMZN. Can they make money selling commodity products through an efficient distribution channel? Won't competitive pricing pressures on the Internet drive the cost of books, CDs, and gifts down to near zero? That may in fact be happening faster than expected. AMZN has a great brand name, but they price their products so low because of competition that they are a long way from making money. For a retailer with a $19 billion market value, that has to be corrected at some point. AMZN splits 3-for-1 today. The stock ran up 34 points yesterday due to the impending split. This morning, however, the stock is indicated at 105 (315 pre-split), down sharply from a split-adjusted close of 118 yesterday. AMZN is selling a lot more product, but they has also have lost more and more money each quarter. At some point, the market will ask, "just when will they actually start making money?" If sales are so great, why are they warning not to expect an improvement in profits?" The answer - pricing - may be a long-term rather than a short-term issue.