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

To: H James Morris who wrote (52835)	4/26/1999 7:37:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

Analysts See Revenue Growth As Key Indicator Of Amazon.com's Health Dow Jones On Line - April 26, 1999 16:09 By Joelle Tessler, Staff Reporter NEW YORK -(Dow Jones)- Wall Street is expecting Amazon.com Inc. this week to report strong top-line numbers for the first quarter, although because it continues to invest heavily, it may not exceed bottom-line estimates. Salomon Smith Barney analyst Richard Zandi stressed on Monday that Wall Street is focused mostly on growth in revenue, traffic and registered users for electronic-commerce companies like Amazon (AMZN) right now. Analysts pay less attention to earnings or losses, he explained, since "we want these companies to keep investing in their businesses." "At this stage, they should be spending aggressively," agreed BancBoston Robertson Stephens analyst Keith Benjamin. The mean estimate of analysts surveyed by First Call is for a first-quarter net loss of 29 cents a share. Zandi officially projects Amazon.com lost 26 cents a share, excluding goodwill and amortization charges, on $271 million in revenue in the first quarter. The analyst believes Amazon's first-quarter revenue number could come in closer to $300 million, however. Amazon posted a 14-cents-a-share loss on $252.9 million in revenue in the fourth quarter, and a split-adjusted loss of seven cents a share on $87.4 million in revenue a year ago. Although the first quarter is a seasonally slow one for retailers, BancBoston Robertson Stephens' Benjamin said Amazon is likely to show substantial sequential revenue growth - after a robust holiday season drove strong online sales in the fourth quarter - because its customer base has been growing so rapidly. The company indicated several weeks ago that its customer base had already reached eight million, up from 6.2 million customers at the end of last year. Still, Amazon's bottom-line results are unlikely to show much upside since the company continues to spend heavily on marketing, developing new products and building out its infrastructure. Benjamin noted, in fact, that Amazon's book-selling operations would have been profitable in the fourth quarter if the company hadn't been investing so heavily. Benjamin projects Amazon had $118 million in operating costs in the first quarter, up from $95 million in the fourth quarter. Zandi said he will be looking for signs of how Amazon - which has been expanding beyond its core bookselling operations - is faring in newer product categories like music and videos. He will also be looking for signs of whether the company's "Shop the Web" referral program is generating significant sales leads for other electronic merchants, which will then pay finder's fees to Amazon. The analyst said he hopes Amazon will also discuss whether it is starting to gain traction in its new person-to-person auction business, which the company launched several weeks ago and which will compete directly with eBay Inc. "Are they able to successfully move book customers to other products?" Zandi said. As Amazon's product mix evolves, the analyst noted, its margins should improve. The company's shift to purchasing more books directly from publishers should also help its margins, he added. Zandi projects Amazon gross margins were between 21% and 22% in the latest quarter, about flat sequentially.