Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (21030)	1/9/1999 10:22:00 AM
From: Jon Koplik	Respond to of 152472

To all - (O.T.) - a WSJ piece about the crazy stuff with AMZN this past week. January 8, 1999 Tech Week E-Commerce Euphoria Continues, With Amazon Taking Center Stage By JASON FRY and TIMOTHY HANRAHAN THE WALL STREET JOURNAL INTERACTIVE EDITION JUST IN CASE anyone had doubts, the week's news showed exactly why Amazon.com Inc. is the poster child for e-commerce. Take your pick of stories: There was the strong sales report that wasn't strong enough for the superheated stock's investors, the fact that a price target viewed by many as crazy just a month ago now looks conservative, or the euphoria that greeted the news that (drum roll) a warehouse had been leased. All those stories hit this week and ensured that the Seattle e-commerce giant remained solidly in the white-hot spotlight cast by Internet investors whose love for the stock knows no limit. First came Amazon's announcement that its fourth-quarter sales totaled $250 million, more than triple the year-earlier level (see article). That news initially pushed Amazon's stock down, as highly informal talk had been making the rounds that Amazon's sales for the period might hit $300 million. But then analysts pointed out that while Amazon might not have hit its whisper numbers (more like shout numbers, given the Internet hysteria of late), the company had far surpassed the analysts' public estimates. Nationsbanc Montgomery Securities' Steve Horen, for one, said he'd been looking for $187 million in sales. Amazon cautioned that the robust sales wouldn't translate into "correspondingly lower net losses" for the quarter, but that fact, of course, didn't trouble investors -- after all, Amazon has never reported a profit, and isn't expecting one anytime soon. More to the point was the company's announcement that it added more than a million new customers in the holiday season. The week also saw Amazon's previously announced 3-for-1 stock split go into effect, bringing the company's stock price down (at least initially) into the $120s Tuesday, which is barely out of the troposphere for tech stocks these days. A day later, Amazon climbed again -- and hit a milestone in doing so. On a split-adjusted basis, the stock was trading above $400, above the controversial price target set by CIBC Oppenheimer Corp. analyst Henry Blodget in mid-December. Mr. Blodget's price target was assailed as hopelessly optimistic by some other analysts when he made it; Merrill Lynch countered by saying Amazon should be at $50 pre-split. That recent but now-forgotten contretemps (see article) had prompted Mr. Blodget to clarify that his prediction was for a one-year period -- and not for, say, 14 trading days, which is how long it took Amazon to hit the mark. And Amazon wasn't done. On Friday, shares surged as high as 199 1/8, thanks to news that the online retailer had ... leased a distribution facility in Nevada. A late sell-off sent it back down to 160 1/4, giving it a gain for the week of 49%. That the stock initially rallied Friday on news of a new warehouse wasn't quite as funny a reason as it first sounded: Having the facility will reduce shipping times and let it stock more products, key factors if the company is to increase its margins and thereby ease analysts' worries about its long-term profitability. But let's be honest: Does anyone really believe that all those individual investors in love with Amazon pondered how 322,560 square feet in Fernley, Nev., would ease Amazon's margin problems? Of course they didn't: They saw that the Internet meal ticket bar none had done something -- anything -- and leapt at the chance to buy more. "It happened a little faster than we thought it would," Mr. Blodget said after Amazon hit his price target, adding that Amazon stock isn't going to go "straight up forever." And he's right, of course. At the moment, true, Amazon looks like that it might hit Mr. Blodget's one-year target without even worrying about niceties like a 3-for-1 split. But that's madness. Isn't it? * * * Write to Tech Week at techweek@interactive.wsj.com. Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved.