Amazon.com's (AMZN) - Get Report troubles usually begin after it posts its quarterly numbers, when investors bemoan that the online retailer is not showing a clear path to profitability. Amazon doesn't report earnings for more than a month, but its woes began today.
Felled by some cautious comments from
Morgan Stanley Dean Witter
analyst Mary Meeker, Amazon tumbled today, carrying other Internet stocks lower as well as hurting the rest of the technology sector. The
ended the week down 91.45, or 2.3%, at 3845.39.
TheStreet.com Internet Sector
index ended off 45.59, or 5.2%, at 837.86 and was down around 60 points for the week.
Amazon closed down 8 1/8, or 19%, at 33 7/8 after Meeker said the company could fall short of her revenue estimates for the second and third quarters.
got the lowdown on Meeker's call in an earlier
piece. In it, Meeker reportedly said that there won't be any upside to her revenue estimates of $600 million for the second quarter and $650 million for the third quarter, and there could even be "modest downside."
In addition, a negative report by
on Amazon's debt added to the selloff. Lehman's Ravi Suria called the company's credit "weak and deteriorating." He wrote that the risk of Amazon's credit isn't priced into the company's two convertible bond issues outstanding and recommends that investors avoid the securities. Lehman hasn't performed recent underwriting for Amazon.
, now seen on the
Web site, paints a grim picture for Amazon in a recent
piece. We'll pass along a key paragraph of his story for free, though you'll need to pay to see the rest of it. "Bottom line from all this: When all is said and done Amazon is just another fourth-quarter retailer that, despite having around $1 billion in cash and marketable securities on its balance sheet, still will need lots more cash to finance its planned expansion."
Amazon's woes seemed to drag down other traditional Internet names as fear continues to spread that revenue is not growing fast enough for Net stocks.
ended down 6 3/8, or 4.8%, at 125 5/16, while
finished off 4 5/16, or 7.4%, at 53 7/8 and
dropped 3 1/2, or 7.7%, to 41 13/16.
ended the day down 3 1/8, or 5.5%, at 53 3/8.
shareholders approved the company's merger with AOL, though it still needs government approval. AOL may have been hurt by a downgrade of entertainment stocks by
on concerns over an economic slowdown. A.G. Edwards lowered both AOL and Time-Warner, along with
, to maintain from accumulate.
Other casualties included a number of stocks that have rallied of late and were ripe for profit-takers.
closed down 4, or 7%, at 53 1/2;
ended down 4, or 7%, at 52;
dropped 5 3/8, or 6.7%, at 74 5/8;
tumbled 5 1/8, 15%, at 29 13/16;
slipped 6 1/8, or 4.8%, to 122 13/16; and
fell 5 5/16, or 12.7%, to 26 7/16.