dcsimg
RealTime IT News

Amazon.com: Blue Christmas for Shareholders?

Even though the market staged a rally yesterday, Amazon.com (AMZN) remained sunk -- ending the day off 12-3/16 at 69-3/4. Volume was 38 million shares.

The big concern for investor: Simply put, Amazon.com may never make any money. After all, since the founding, the company has lost over half a billion dollars.

Or, perhaps the danger sign was when the CEO, Jeff Bezos, was named Time Person of the Year. Isn't that when there is no more room on the upside?

Well, the company keeps selling books -- as well as many other products, such as CDs, toys, home electronics and so on. Yesterday, the company announced that fourth-quarter sales were $650 million, which was up from $253 million in the same quarter last year. To put this into perspective, Amazon.com had $610 million in sales for all of 1998.

There were other important results. Media Metrix ranked Amazon.com the top e-commerce site (from November 22 to December 26) in terms of traffic. Also, more than 99 percent of orders met the holiday deadlines (there were 20 million items shipped).

Despite the recent slump in the stock and negative comments from analysts, I think Amazon.com is a strong bet. The company is rapidly becoming the e-commerce vortex -- capturing more and more of the money that is coursing into the Net. What's more, Amazon.com is collecting valuable behavioral information on its customers, which can be translated into better marketing campaigns.

However, I would not be surprised if the stock continues to meander. The company reports its earnings on February 2. As has been indicated by management, Amazon.com has been investing large dollars in marketing and distribution (in fact, yesterday the company announced there will be charges for excess inventory). So, the financial reports will likely show heavy red ink, which will probably further depress the stock price. But as is typical with Net stocks, this will probably be overdone and give investors an opportunity to purchase the company at a compelling valuation.