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

To: dennis michael patterson who wrote (35174)	1/16/1999 5:03:00 PM
From: llamaphlegm	Read Replies (1) \| Respond to of 164684

fair nuff and now for something we hope you'll all really enjoy barron's 1. January 18, 1999 Tulipmania -- Cover Story, Part 4 Q: Thanks, Barton. It looks like Mario wants to talk tulips next. Gabelli: Our goal always has been to make 10% real by picking stocks that we hope, after taxes, after inflation, accomplish that. So we try to find companies at a significant margin of safety to intrinsic value. The second part of our strategy is to try to buy things for the long term, because it's not only what you make, but what you keep. We'd rather pay 20% long-term capital-gains taxes than 40% on ordinary income from trading. But we're here in January of 1999, and even 25% looks awfully dull when you make that in one week -- 50%, in Amazon. So I have succumbed and I am going to recommend only stocks that will grow to the sky -- Excite, uBid, eBay, Amazon and that's it. Nothing else! You can have my tulips, Arthur. Don't say I never gave you anything. They're starting to wilt -- Samberg: Am I allowed to eat them? Gabelli: Do anything you like. Charles MacKay wrote about all this in 1841, in Extraordinary Popular Delusions and the Madness of Crowds. 2. Q: What's the upside? Black: Who knows, I see it moving up; a lot of volatility. The other thing is that you have had a lot of first-time investors come into the market over the last four and five years who don't know about the Ibbotson studies showing that stocks have compounded at only 10.5% in this century. They think it goes up 20% a year like clockwork. Gabelli: No, 20% a week. You haven't been trading Amazon. 3. January 18, 1999 Mailbag Amazon's Choice To the Editor Almost unnoticed in the Amazon.com saga is management's own grandiosity about the company's prospects. At September 30, Amazon had $337 million in cash and equivalents, $341 million in long-term debt, $180 million in shareholder's equity ... and $213 million in goodwill and intangibles. True enough, the long-term debt essentially can be paid off with current cash. But that isn't management's stated intent. These monies will be used to grow the company, to complete potential acquisitions ... and to offset ongoing operating losses -- losses that amounted to $78 million net for 1998's first nine months. The grandiosity is evidenced in management's willingness to issue that $341 million in debt several months ago, rather than using the cheap currency of its common stock. (Need I mention the last example of a hypergrowth company that engaged in such a financing strategy: Boston Chicken?) Fair enough, one could argue that, with Amazon's stock having skyrocketed, management now looks astute for having issued debt instead of shares in the financing. However, now is the time for this company to show that it knows something about sound financial management. At its $161 stock price (as I write), with 158 million shares outstanding, Amazon need issue only another two million shares to pay off the long-term debt. The notion that management is more worried about dilution than eliminating this burden shows the heights of absurdity we've come to. In short, if it ends disastrously for Amazon, management will have no one to blame but itself. TIMOTHY J. STABOSZ LaPorte, Indiana (llamanote -- because the merest hint of more dilution in a secondary will be a pin which pricks the balloon) and the best of all from barrons online on 1/12 No earnings? No problem, say the legions of online investors behind the boom. They bid up share prices in unprofitable Internet companies like Ebay by 500% and Amazon.com by 1,000% last year. And their appetite for new issues of 'Net stocks seems insatiable. But as managers of some of last year's top-performing technology funds watched valuations of these stocks reach more and more rarefied levels, they have taken the money and run. They have locked in gains on some of their biggest winners -- names like Amazon.com, America Online and Lycos -- and are getting more cautious on the entire technology sector, over fears of the year 2000 problem and its impact on corporate information technology (IT) spending. Paul Cook, lead portfolio manager of the Munder NetNet fund, an Internet-focused fund that was among 1998's big winners with a 97 % total return, has already unloaded pure Internet plays like Amazon, AOL and Lycos, which now make up only 1% of the fund's portfolio. Overall that group comprises 30% of total assets, down from 40% two months ago. Cook tells Barron's Online he's not bearish, but he thinks the Internet stocks are "three, four, five steps ahead of themselves." so who's gonna buy the zon when the internet-specific portfolio managers have been scared off?????