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

To: Sarmad Y. Hermiz who wrote (60078)	6/2/1999 9:47:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164685

Investment Highlights: * We expect that the Barron's article on AMZN, though raising few new concerns, to contribute to negative sentiment on the sector and AMZN. * We continue to rate Amazon.com Accumulate/Buy. * The AMZN convertible is included in our Convertible Model Portfolio and we continue to recommend it. * The bond's valuation discount has increased at current levels and the risk/reward ratio is now 2:1. Amazon.com 4.75% 2/1/09 Although the Barron's article on Amazon.com (AMZN/$118-3/4; D-2-1-9) raised few new concerns, we expect it to contribute to the negative sentiment regarding the sector in general and AMZN in particular—and cause further near term weakness in the stock. Barron's revisited most of the persistent concerns about Amazon.com, including the lack of profitability, increasing investments in bricks and mortar, competition, valuation, and slowing growth. Although all of these are logical concerns, they aren't new. As previously described, the only issues that are of real concern to us with regard to Amazon.com's stock performance are 1) slowing growth and 2) the challenge of expanding into additional product categories. We believe that Amazon.com's investor base is in transition, with momentum investors exiting the stock. Because we do not expect to see the company's sequential growth stabilize or accelerate until Q4, we expect this weakness to continue. (H. Blodget 6/1/99). Pre-opening, the AMZN 4-3/.4s are quoted at 90-5/8 vs. $111-1/2 for the common for a 26.8% conversion premium and a 5.2% current yield. At this level, we estimate that the bond is 4.6% cheap to theoretical value, using model inputs of 40% annualized stock volatility and a credit spread of 540 bps over the ten year Treasury. Our one year total return projections are +16.4%/-8.0% in response to a price move by the common of +/-25%. Provisional call protection extends to 2/5/02 (NC unless the common is at least $234.08) and the bond is rated Caa3/CCC+ by Moody's/S&P. Investors will receive a make-whole payment of $212.60 per $1,000 face amount if the bond is called during the provisional period. We have included the AMZN convert in our Convertible Model Portfolio as an Equity alternative. The valuation discount has increased as the stock price has come down. In view of this plus a 2:1 risk/reward ratio and our Accumulate/Buy rating on the stock, we continue to recommend it. (6/1/99). Bulletin United States 1 June 1999 T. Anne Cox, CFA First Vice President Preston M. Harrington III First Vice President Today In Convertibles AMZN Merrill Lynch & Co. Global Securities Research & Economics Group Global Convertibles Research Group RC#11315201 Convertibles

To: Sarmad Y. Hermiz who wrote (60078)	6/2/1999 10:59:00 PM
From: GST	Read Replies (1) \| Respond to of 164685

Sarmad -- The short covering rally is not reason to relax. You know my position, and I have nothing to gain from whatever you do or don't do, so take this for what it is worth -- free advice. If the numbers are bad on Friday there will be an earthquake. If the numbers are bad again next week, there will be a tidal wave -- or tsunami as they say here. Earlier this century there were several hundred people in Hawaii killed by a tsunami -- do you know why? They heard it was coming and went down to the shore to watch and were all swept out to sea by a wall of water travelling at 100 mph. Head for higher ground Sarmad.