Wall Street to Amazon: Picture This

Shares of online retailer Amazon.com were down substantially
this morning as investors reacted to an analyst’s concerns about the
company’s rapid expansion following the announcement of a deal to open a
camera and photo store.

The store was launched in conjunction with ofoto.com and offers both digital
and conventional photography equipment and services. Ofoto Inc. was founded
last year and offers secure online photo storage, film and digital
processing, quality silver-halide prints, and photo display and storage

Contributing to the stock price decline was an appearance on CNBC television
by Robertson Stephens analyst Lauren Cooks Levitan, who said that with the
company’s present business model, she doubted it could ever turn a profit. In
fact, Amazon has yet to make any money.

CBS MarketWatch.com quoted Levitan as saying in a research note to clients
that initial findings from a proprietary research study of Amazon’s
fulfillment efficiency “exposes weakness in the online retailer’s current
business model.”

The company’s rapid product diversification — from books to music, movies,
toys, tools, hardware, software, kitchenware, lawn and patio items, and cars
— was called into question.

At mid-morning, Amazon was down 6.6 percent, trading at $32.75, down $2.31.
The stock opened at $33.43, after closing yesterday at $35.06.

The deal with Ofoto lets customers send their digital photos over the
Internet — or their film through the mail — and Ofoto will create online
photo accounts containing the pictures. Financial terms were not disclosed.

Amazon.com has said it is seeking to be a company where customers “can find
and discover anything they might want to buy online.” Amazon.com lists more
than 18 million unique items

“The Amazon brand has become synonymous with access to everything, Levitan
was quoted by Bloomberg News as saying. “Could any amount of planning allow
them to run fulfillment facilities (that warehouse and handle orders) for 18
million products?”

News Around the Web