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

To: Jeff Mills who wrote (33051)	1/6/1999 5:59:00 PM
From: Dan Woodbury	Read Replies (1) \| Respond to of 164687

Reply: Borders Group (BGP) Warns: Seems AMZN is eatin some lunch? No doubt that AMZN is taking sales away from other book sellers. Apparently some Palo Alto bookstore closed its doors because too many potential customers were browsing the store but buying online. However, I don't see how this news is good for Amazon. Do you really expect Borders, Barnes & Noble and the hundreds of regional book and music sellers to close up shop because some pure e-tailer is taking sales away from them? Of course not. The beauty of capitalism is that it provides the freedom for companies to start up and take on the establishment. It also allows the establishment to fight back (which is why GE, GM and even IBM are still going strong after all these years). Its called competition and is what makes the market (and ultimately the stock market) effecient and why the winner in the whole mess is the consumer. The bottom line is that the book business is a slow growing, low margin industry. The same goes for the consumer electronics business, the movie industry and on down the line. I've heard investors question why Warren Buffett would criticize pure internet retailing. Well this news would seem to support Buffett's criticism. We all know that Amazon has operating losses and now Borders, an established brick & mortar store is reporting e-commerce operating losses. Its not just that these businesses are reporting losses it is that there is no indication that they will ever generate profits! Someone dispute my claim but as far as I can see the only way Amazon becomes profitable is if every other book e-tailer gives up and closes down. Otherwise, competition among these businesses will continue ad-nauseum. And since Barnes & Noble and Borders can at least offset their e-commerce losses with brick & mortar profits I would have to bet that they will be able to stay in the game longer. Yes, AMZN is an amazing stock. But the jury is still out on whether book e-tailing can be a successful business.