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

To: Sarmad Y. Hermiz who wrote (41412)	2/20/1999 1:26:00 PM
From: Jan Crawley	Respond to of 164684

I am using a SW package, but it still is the most boring thing in the WWW. Btw, I am learning a new song it goes like this..."I am forever blowing the bubbles..." Sepecially dedicated to Amzn, the stock, and the Fans!!

To: Sarmad Y. Hermiz who wrote (41412)	2/20/1999 3:06:00 PM
From: Glenn D. Rudolph	Respond to of 164684

5 convertible bond issuance on January 29th, when the stock was at $120. With AMZN hovering around $95 these days, it's instructive to ask: what's going on? We have heard and responded to a few of the more pernicious of the explanations being bandied about for the proximate cause of this move downward. The first, that the $1.2 convertible bond offering suggests a sizable dilution risk down the line and marks a shift in the company's debt-only capital raising policy, is probably temporary and certainly technical in nature. The second, that the sale of goods over the Web will eventually be at or lower than cost (e.g. free-pc.com and Onsale's AtCost) would augur an important and fundamentally new trend in Internet retailing, is much more intellectually interesting, but ultimately not the market-changing paradigm some would like us to think. The persistent argument; that margins for Internet retailing are likely to drop to zero or turn negative soon, has certainly gained a bit of currency over the last few weeks as the Street has searched for a fundamental reason for the sell-off for AMZN. The re-construction of the bear case revolves around the advent and (assumed) eventual success of the Web sites that offer goods at or lower than cost and that make money based on advertising and lead generation (among other means). The best, and most timely, example of this strategy is by free-pc.com, the idealab company that is giving away 10,000 PCs with Internet access to selected folks who fill out a questionnaire on their personal tastes, habits, income, and other demographic information. These folks agree to receive ads (which take up half of a 4-gig hard drive) constantly on their free PC desktop. Though we have no argument with the strategy itself (indeed, the 1 million-plus applications that the company purportedly received are testimony to its potential success), or the economics (this is a Moore's law arbitrage: hardware prices are plummeting at a time when Internet advertising is doubling every year), we do, however, have an argument with the conclusion that the success of this trend changes the retailing landscape forever. Underlying the argument that low- or no-cost retailing puts enormous pressure on Amazon's margins over time is the assumption that all consumers make their purchasing decisions based exclusively on price. That is, consumers will always seek out (or have buying agents seek it out for them) the lowest priced good on the Internet; call it the Price Is King thesis (apologies to Bob Barker). Because the Internet reduces the inefficiencies of buying and selling goods (by removing the constraints of time, place, or form), this thesis isn't necessarily out of the ballpark. After all, we're in print in January of 1998 saying that the Internet could eventually cause deflation in certain industries thanks to its ability to drive inefficiencies (read: costs) out of the process of meeting supply and demand for goods. Proponents of the Price Is King Theory, however, go a bit too far and fail to recognize that there are a series of items, both tangible and intangible, that consumers measure when deciding on what to buy and from whom to buy it online. We would remind Internet investors of the very real and very painful lesson that AT&T learned back in 1996 when they launched AT&T Worldnet, their own ISP service for connecting consumers to the Internet. At the press conference here in NYC, the company was breathless in their optimism for how many subscribers they would be able to get in 2-3 years. Figures in the 5 million+ were thrown around confidently, based on the perceived advantage of “subsidized” access, that is,