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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end? -- Ignore unavailable to you. Want to Upgrade?

To: EL KABONG!!! who wrote (580)	1/10/1999 8:39:00 PM
From: Sir Auric Goldfinger	Respond to of 3543

This Thread's favorite author writes:"Analysts Warn Online Retailers May Have Bottom-Line Trouble By JOHANNA BENNETT Dow Jones Newswires Analysts said Friday that although leading online-shopping companies like Amazon.com Inc. probably will beat fourth-quarter revenue estimates, they aren't optimistic that they'll beat bottom-line expectations. Electronic retailers brought in a lot of money this holiday season. But in the wild world of online shopping, big revenues don't automatically mean a stronger bottom line. Like Amazon, other well-known electronic retailers probably will see lower margins as a result of aggressive pricing, the use of promotional discounts designed to attract customers, and continuous spending to develop brand-name recognition, analysts said. But most strictly online retailers are expected to report fourth-quarter losses, and investors have been trained not to expect revenue growth and profitability to walk hand-in-hand, said Lauren Cooks Levitan, an analyst for BancBoston Robertson Stephens. So while Ms. Levitan's $175 million revenue estimate for Amazon is conservative by her own admission -- particularly in view of Amazon's own announcement this week -- her fourth-quarter bottom-line estimate remains a loss of 20 cents a share, adjusted for a recent split, compared with a year-ago loss of eight cents a share, adjusted for two splits and an earnings restatement. "Amazon.com was the one to make that clear first," Ms. Levitan said. "They said from day one they were going out of their way to build brand name and customer base. They have trained people from day one not to look for top-line surprises to lead to profitability surprises." Amazon announced Tuesday that it expects to report $250 million in fourth-quarter sales, trouncing analysts' published estimates and crushing year-ago sales figures of $66 million. "They beat my estimates by almost $70 million," said Steve Horen, an analyst for NationsBanc Montgomery Securities, who predicted a loss of 20 cents a share on revenue of $187 million. The company's release made no specific mention regarding earnings. But Amazon did warn investors that the higher-than-expected top-line figure probably wouldn't translate into narrower losses because of pricing pressures, the use of promotional discounts and higher costs for fulfilling orders. Initially, investors appeared disappointed, due largely to informal speculation that Amazon could ring up as much as $300 million in fourth-quarter sales. The stock was briefly pushed down, but rallied to close at $124.50 Tuesday, up more than $6 a share. On Friday, Amazon shares closed at 160 1/4, up 1 3/8, despite surging to 199 1/8 intraday. Four-year-old Amazon isn't expected to show a profit until after next year. The company has opted instead to rapidly build up revenue while spending heavily on marketing and building its customer base. Such investments are key, analysts said. Over the next year, the electronic-retailing sector is expected to thin out and survival will depend on maintaining a strong revenue stream and building customer loyalty. "Almost everyone is going to meet or beat their numbers in the fourth quarter," said NationsBanc Montgomery's Mr. Horen. "The increase in the adoption of online buying was so incredible. Now the question is who will continue to show strength as we go into what is going to be a more challenging quarter for these companies." At least one company might be the exception. BancBoston Robertson Stephens's Ms. Levitan said online auction house eBay Inc. could beat her earnings estimate of four cents a share if the company substantially exceeds revenue estimates of $15.7 million. The auction house has high margins because it doesn't have any inventory. "That's the beauty of this business model," Ms. Levitan said. "It's been profitable all along." eBay posted third-quarter profits in October of five cents a share, excluding charges worth three cents a share, on revenue of $12.9 million. The company went public in September. For his part, Mr. Horen predicted eBay would break even on fourth-quarter revenue of $15.9 million. Other leading electronic retailers, however, are expected to post losses for the quarter. Cyberian Outpost Inc. reported third-quarter losses last month of 34 cents a share on revenue of $23.5 million. Meanwhile, the mean estimate of analysts surveyed by First Call predicts losses for the fourth quarter, which ends in February, of 39 cents a share. MR. Horen said the online computer retailer, which went public in July, probably will outperform his fourth-quarter revenue estimate of $27 million. His estimate included a loss of 36 cents a share. Music retailer CDNow Inc., which is slated to merge with competitor N2K Inc.'s Music Boulevard, will post losses of 79 cents a share on revenue of $18.7 million, according to Derek Brown, analyst for Volpe Brown & Whelan Co. His estimates for N2K include a loss of $1.39 a share on revenue of $14.5 million, compared with a loss of $1.20 on revenue of $4.8 million from continuing operations a year ago. Mr. Horen predicted CDNow's results will fall in line with estimated losses of 76 cents a share on revenue of $20 million. The company went public in February. Elsewhere, Mr. Horen estimated Onsale Inc., another online auction house, would post fourth-quarter losses of 15 cents a share on revenue of $64.6 million, compared with losses of nine cents a share on revenue of $33 million a year ago." interactive.wsj.com

To: EL KABONG!!! who wrote (580)	1/11/1999 11:56:00 PM
From: Stuart C Hall	Read Replies (1) \| Respond to of 3543

OK, here's my shot: All of the Internut investors will start funneling towards only those companies that are profitable. Main St will wake up and realize that AMZN et. al. will never be profitable and will start investing in only those companies that are making money or are not bleeding green. For example, CMGI. Money will leave the AMZNs and head towards the CMGI's. That will be part 1, and will start the first week of July or September. Part 2 will be when all of the AMZN holders crowd the ships of profitable Internuts to where the stocks gain 400+ in one day. Those over populated Titanics will cause a general panic and the population will be crushed on the way to the exit door. That should happen 3-4 weeks after the general movement away from the high flyers and perhaps within a week of articles hitting all the main rags (newsweek, businessweek, time etc.) That's my bet. Opinions? Or, the Internet will revolutionize our economy and all the AMZN's will correct, but will not collapse. I'd say this second theory has some merit over an extended timeframe. Regards, Stuart