Updated from 4:58 p.m. EDT
sales growth in the latest quarter, six more analysts lowered their ratings on the Internet retailer's stock on Thursday, driving its shares down 13%.
The downgrades -- spurred by news that the company had recorded a lower-than-expected $578 million in second-quarter sales -- shattered enthusiasm among investors, who already were lamenting the abrupt
departure of Amazon President Joseph Galli.
Galli, who spent a little more than a year with the company, announced earlier this week that he would take the chief executive post at
, a business-to-business Internet company in Pennsylvania.
Then a flurry of downgrades from
SG Cowen Securities
Janney Montgomery Scott
hit Wall Street on Thursday, rattling faith in the Seattle-based company.
Later in the day,
Pacific Crest Securities
leveled a "market perform" rating on Amazon, dropping its rating from "strong buy."
Scott Reamer of SG Cowen is one analyst who joined the pack of skeptics.
"Just about the only thing keeping our bullish hope afloat over the last few quarters as the stock has been beaten down by the bears and a more exacting stock market has been the very real likelihood that revenue could always outperform and make profitability even closer to reality," Reamer wrote in a research report. "Today that feels like less of a probability."
In the wake of the earnings announcement, Reamer, who had expected revenue of about $600 million, downgraded Amazon from "strong buy" to "buy" on Thursday. In the report, he expressed confidence in the company's business model, but said he feared investors are "less inclined to give Amazon the benefit of the doubt."
Shares of Amazon closed at 31 3/8, down 4 11/16, after reaching a 52-week low of 29 3/4.
Some analysts, however, remained steadfast on Thursday, despite the sagging stock price and mounting lack of confidence in the company.
analyst Kristine Koerber maintained her buy rating, saying the company is making strides toward a profitable future, something that has eluded so many Internet companies.
And Heath Terry, an analyst with
Credit Suisse First Boston
, also kept his buy rating on Amazon, but he lowered his third-quarter revenue target to $600 million from $660 million. In the fourth quarter of this year, he estimated, revenue would reach $1 billion.
"We didn't see the point of piling on," said Terry, whose firm does not do any underwriting for Amazon. "The revenue numbers were certainly disappointing, but the gross margin and the EPS line made up for the revenue to a degree."
The company's losses widened to 33 cents a share in the latest quarter, compared with 26 cents a share last year, but they beat the forecast on Wall Street of a loss of 35 cents a share, according to
First Call/Thomson Financial
But the feedback from analysts has been mainly negative. Holly Becker of
lowered her rating of Amazon stock to neutral from buy on Wednesday, citing weakness in some of its new businesses.
Banc of America's
Tom Courtney on Tuesday downgraded the company's shares, worried about the company's ability to meet its growth targets.
sales of $578 million represent an 84% increase over the comparable period in 1999, but a modest climb from the $574 million in sales reported in the first quarter. Amazon and analysts alike had expected sales of between $585 million and $600 million.
In a bid to turn a profit, Amazon has sought to expand its appeal, moving beyond online book sales into the music, video and hardware realms, among other areas. The company's zShops initiative, a space within Amazon where merchants can sell Web consumers items ranging from cameras to clothes, is yet another example of its effort to entice more shoppers.
"zShops is brilliant," said Kevin Silverman, an analyst with
. "The categories of business that do well can become concepts for new businesses. They know what's popular, because the ideas are flowing through them. zShops in a way has become a lab for them."
Silverman, who also maintained his buy rating on Amazon, said he thinks the company can post a profit in 2002. He added that his firm had not done any underwriting for Amazon.
For now, though, the company must persuade doubtful investors -- and analysts -- to keep the faith. Officials with Amazon declined to comment Thursday.