Amazon.com, RealNetworks Slump, and Net Stocks Follow
SAN FRANCISCO -- Internet stocks were making the most noise in the tech sector today, with losses in
Amazon.com
(AMZN) - Get Amazon.com Inc. Report
and
RealNetworks
(RNWK) - Get RealNetworks Inc. Report
contributing to weakness in the sector.
The biggest piece of news was the rip job on
Amazon.com
(AMZN) - Get Amazon.com Inc. Report
in
Alan Abelson's
"Up & Down Wall Street" column in
Barron's
. Abelson said he thinks the stock is worth "at most 25" and he was "doubtful" that the company would ever make money. Abelson writes that at twice its sales, Amazon's stock would sell for less than 25 -- and at one times sales, for less than 12.
While he had not read the article, Derek Brown, Internet analyst with
TheStreet Recommends
Volpe Brown Whelan
, said Abelson's figures "totally disregard the company's tremendous growth rate and growth potential," and that Amazon is laying the foundation to be a "very large business down the road."
Abelson's comments have still spooked some investors, and shares of the online retailer were down 18 1/16, or 10%, at 154.
Selling the Fact
In the "buy the rumor, sell the fact" department, we have RealNetworks. The company officially introduced its new streaming media software
RealJukebox
today. Last week, with rumors about the new system swirling, the stock gained as much as 51 points. Today, it is down 14 3/4, or 6.7%, at 206 3/4.
Another Amazon Competitor?
One of the concerns about Amazon.com is that there are few barriers of entry to its market, and an established retailer like
Wal-Mart
(WMT) - Get Walmart Inc. Report
could eventually provide strong competition.
There are any number of companies looking to take share away from Amazon, and one such company is debuting today:
ebates.com
, an online retailer whose gimmick is offering rebates to consumers who purchase items after linking from its site. After going to ebates.com, consumers have links to online stores and if they purchase something, ebates.com rebates the commission it makes from the company to the consumer. ebates.com makes money through advertising.
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The
Internet Advertising Report
said today that advertising revenue totaled $1.92 billion in 1998. This is more than double from the $906.5 million spent in 1997 and surpassed the estimated $1.58 billion spent on outdoor advertising. Results were most impressive in the fourth quarter, with revenue of $655.6 million, a 34% increase over the previous year.
Also, the
New York Times
reported today that book sales declined 3% in 1998 to 1.04 billion books, even though online booksellers had a larger presence. For the first time, online booksellers were considered a category and captured 2% of the market, according to the survey.
