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  • valuehound valuehound Dec 7, 1997 8:37 PM Flag

    Short Sale

    Hi, I found this article from Bloomberg on SI and copied here for you to read:



    Seattle, Dec. 5 (Bloomberg) -- Amazon.com Inc., the online
    book retailer that calls itself the Earth's Biggest Bookstore,
    shows that the word ''Internet'' works wonders.

    Named after the Amazon River, the Seattle-based company
    expects millions of consumers to scan its online catalog of 2.5
    million titles and make purchases from home with the click of a
    computer mouse. That's why Amazon's stock was one of the hottest
    initial public offerings of the year, rising threefold since May.

    Investors who see nowhere for the stock to go but up may
    want to think again. There's scant evidence that droves of people
    want to buy books online -- and if they do, money-losing Amazon
    may not be the service they use.
    ''Most people won't give up on bookstores,'' said Giovanni
    Zocche, a software consultant at Bora Ventures.

    What's more, if online book buying takes off, Amazon's
    advantage of being first could quickly disappear as bigger,
    better-financed book retailers muscle their way into Internet
    selling.

    Barnes & Noble Inc. is beefing up its online site, which
    opened in May, and Borders Group Inc. plans to open its site for
    business in January. The two retailers lead the $25 billion U.S.
    book-selling industry with their chains of supermarket-size
    stores.
    ''There's already a battle,'' said Hambrecht & Quist LLC
    analyst Genni Combes, who has a ''buy'' recommendation on Amazon.

    Not Shy

    While Amazon executives won't say when or if the company
    ever will make money, Barnes & Noble isn't shy about discussing
    its online service. The New York-based company expects sales of
    $100 million to $125 million in 1998 and turn a profit in 1999,
    said Chief Operating Officer Stephen Riggio.
    ''With Barnes & Noble's nameplate, they'll be able to gain
    at least as much market share as Amazon,'' said Blackford
    Securities analyst Jason Klein, who rates Barnes & Noble a
    ''buy.''

    There's no arguing with Amazon fans on one point: The stock
    is the equivalent of a bestseller. Since going public at $18 in
    May in a $54 million IPO, the shares have soared and recently
    trade at about 54. The stock closed at a high of 66 on Oct. 29.

    At recent prices, Amazon has a market value of about $1.29
    billion. Not bad for a company with $90 million in sales in the
    past four quarters. Compare that with Barnes & Noble, with a
    market value of $2.2 billion and sales of $2.71 billion -- and a
    profit to boot.

    Selling More, Losing More

    Started in 1994 by former Wall Street money manager Jeffrey
    Bezos, Amazon's plan is to boost sales rapidly, helping it cover
    fixed costs. Then, once sales are high enough, demand the same
    discounts its bigger rivals get from publishers.
    ''It's a scale business,'' said Amazon Chief Financial
    Officer Joy Covey.

    Yet, the company's losses are expected to widen as its sales
    increase, mainly because of high sales and marketing costs.
    Indeed, third-quarter sales shot to $37.9 million from $4.2
    million a year earlier, yet its loss more than tripled to $8.5
    million from $2.4 million.

    Oddly enough, Amazon has higher overhead costs than its
    rivals, which must pay for hundreds of stores, vast inventories
    and thousands of workers. Amazon has about 19 cents left from
    each $1 in sales, while Barnes & Noble holds onto about 35 cents
    and Borders keeps about 25.

    Story Telling

    Many investors aren't all that concerned with the numbers,
    said consultant Zocche.
    ''They get excited by the story,'' he said.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • piece. It makes more sense than most any long
      post I've read lately. Bloomberg piece also doubts
      whether this type of commerce will ever become the "norm"
      which I doubt too. Doesn't sound like they think AMZN
      will do very well either. 37mil. in sales yet loses
      increase 3X to 8.5mil! And they don't have much
      competition yet either. These guys and this sector is going
      to have a very hard time making ANY money in the
      future.

    • Pay special attention to this part:

      <b>"At recent prices, Amazon has a market value of about $1.29
      billion. Not bad for a company with $90 million in sales in the
      past four quarters. Compare that with Barnes & Noble, with a
      market value of $2.2 billion and sales of $2.71 billion -- and a
      profit to boot."</b>


      Why would anyone buy Amazon , when Barnes and Noble generates 30 times as much in revenues and sells for just under twice the market cap of Amazon? BKS also has a PROFITABLE business, and AMZN is forecast to continue LOSING money into next year. I dont
      get it. Also, AMZN is limited to sales on the internet, and can only do business with people who own computers and have access to the internet. BKS and BGP can sell to both the internet user and the man on the street. Buying AMZN at these ridiculous valuations makes no sense whatsoever. When the hype dies down, so will the stock price, probably all the way back to the IPO of 18.

    • Read what they said 3 years ago!

      Subj:
      Bloomberg article
      By: valuehound
      Date: 12/7/97 8:37
      pm

      Hi, I found this article from Bloomberg on SI and
      copied here for you to read: Seattle, Dec. 5 (Bloomberg)
      -- Amazon.com Inc., the online book retailer that
      calls itself the Earth's Biggest Bookstore, shows that
      the word ''Internet'' works wonders. Named after the
      Amazon River, the Seattle-based company expects millions
      of consumers to scan its online catalog of 2.5
      million titles and make purchases from home with the
      click of a computer mouse. That's why Amazon's stock
      was one of the hottest initial public offerings of
      the year, rising threefold since May. Investors who
      see nowhere for the stock to go but up may want to
      think again. There's scant evidence that droves of
      people want to buy books online -- and if they do,
      money-losing Amazon may not be the service they use. ''Most
      people won't give up on bookstores,'' said Giovanni
      Zocche, a software consultant at Bora Ventures. What's
      more, if online book buying takes off, Amazon's
      advantage of being first could quickly disappear as bigger,
      better-financed book retailers muscle their way into Internet
      selling. Barnes & Noble Inc. is beefing up its online
      site, which opened in May, and Borders Group Inc. plans
      to open its site for business in January. The two
      retailers lead the $25 billion U.S. book-selling industry
      with their chains of supermarket-size stores.
      ''There's already a battle,'' said Hambrecht & Quist LLC
      analyst Genni Combes, who has a ''buy'' recommendation on
      Amazon. Not Shy While Amazon executives won't say when or
      if the company ever will make money, Barnes & Noble
      isn't shy about discussing its online service. The New
      York-based company expects sales of $100 million to $125
      million in 1998 and turn a profit in 1999, said Chief
      Operating Officer Stephen Riggio. ''With Barnes & Noble's
      nameplate, they'll be able to gain at least as much market
      share as Amazon,'' said Blackford Securities analyst
      Jason Klein, who rates Barnes & Noble a ''buy.''
      There's no arguing with Amazon fans on one point: The
      stock is the equivalent of a bestseller. Since going
      public at $18 in May in a $54 million IPO, the shares
      have soared and recently trade at about 54. The stock
      closed at a high of 66 on Oct. 29. At recent prices,
      Amazon has a market value of about $1.29 billion. Not
      bad for a company with $90 million in sales in the
      past four quarters. Compare that with Barnes & Noble,
      with a market value of $2.2 billion and sales of $2.71
      billion -- and a profit to boot. Selling More, Losing
      More Started in 1994 by former Wall Street money
      manager Jeffrey Bezos, Amazon's plan is to boost sales
      rapidly, helping it cover fixed costs. Then, once sales
      are high enough, demand the same discounts its bigger
      rivals get from publishers. ''It's a scale business,''
      said Amazon Chief Financial Officer Joy Covey. Yet,
      the company's losses are expected to widen as its
      sales increase, mainly because of high sales and
      marketing costs. Indeed, third-quarter sales shot to $37.9
      million from $4.2 million a year earlier, yet its loss
      more than tripled to $8.5 million from $2.4 million.
      Oddly enough, Amazon has higher overhead costs than its
      rivals, which must pay for hundreds of stores, vast
      inventories and thousands of workers. Amazon has about 19
      cents left from each $1 in sales, while Barnes & Noble
      holds onto about 35 cents and Borders keeps about 25.
      Story Telling Many investors aren't all that concerned
      with the numbers, said consultant Zocche. ''They get
      excited by the story,'' he said.

    • Bloomberg on SI and copied here for you to read: Seattle, (Bloomberg) -- Amazon.com Inc., the online book retailer that calls itself the Earth's Biggest Bookstore, shows that the word ''Internet'' works wonders. Named after the Amazon River, the Seattle-based company expects millions of consumers to scan its online catalog of 2.5 million titles and make purchases from home with the click of a computer mouse. That's why Amazon's stock was one of the hottest initial public offerings of the year, rising threefold since May. Investors who see nowhere for the stock to go but up may want to think again. There's scant evidence that droves of people want to buy books online -- and if they do, money-losing Amazon may not be the service they use. ''Most people won't give up on bookstores,'' said Giovanni Zocche, a software consultant at Bora Ventures. What's more, if online book buying takes off, Amazon's advantage of being first could quickly disappear as bigger, better-financed book retailers muscle their way into Internet selling. Barnes & Noble Inc. is beefing up its online site, which opened in May, and Borders Group Inc. plans to open its site for business in January. The two retailers lead the $25 billion U.S. book-selling industry with their chains of supermarket-size stores. ''There's already a battle,'' said Hambrecht & Quist LLC analyst Genni Combes, who has a ''buy'' recommendation on Amazon. Not Shy While Amazon executives won't say when or if the company ever will make money, Barnes & Noble isn't shy about discussing its online service. The New York-based company expects sales of $100 million to $125 million in 1998 and turn a profit in 1999, said Chief Operating Officer Stephen Riggio. ''With Barnes & Noble's nameplate, they'll be able to gain at least as much market share as Amazon,'' said Blackford Securities analyst Jason Klein, who rates Barnes & Noble a ''buy.'' There's no arguing with Amazon fans on one point: The stock is the equivalent of a bestseller. Since going public at $18 in May in a $54 million IPO, the shares have soared and recently trade at about 54. The stock closed at a high of 66 on Oct. 29. At recent prices, Amazon has a market value of about $1.29 billion. Not bad for a company with $90 million in sales in the past four quarters. Compare that with Barnes & Noble, with a market value of $2.2 billion and sales of $2.71 billion -- and a profit to boot. Selling More, Losing More Started in 1994 by former Wall Street money manager Jeffrey Bezos, Amazon's plan is to boost sales rapidly, helping it cover fixed costs. Then, once sales are high enough, demand the same discounts its bigger rivals get from publishers. ''It's a scale business,'' said Amazon Chief Financial Officer Joy Covey. Yet, the company's losses are expected to widen as its sales increase, mainly because of high sales and marketing costs. Indeed, third-quarter sales shot to $37.9 million from $4.2 million a year earlier, yet its loss more than tripled to $8.5 million from $2.4 million. Oddly enough, Amazon has higher overhead costs than its rivals, which must pay for hundreds of stores, vast inventories and thousands of workers. Amazon has about 19 cents left from each $1 in sales, while Barnes & Noble holds onto about 35 cents and Borders keeps about 25. Story Telling Many investors aren't all that concerned with the numbers, said consultant Zocche. ''They get excited by the story,'' he said.

    • they said that investors are looking on AMZN more then on BKS B&N.com check it out

 
AMZN
340.02-3.16(-0.92%)Aug 28 4:00 PMEDT

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