Amazon Falls on Analyst Comments

Amazon.com (Nasdaq: AMZN) fell 221/32 to 25 1/32 Tuesday after Banc of America Securities analysts said theyexpect the e-tail giant to experience a slowdown in growth next year.

“We are becoming incrementally cautious on the stock, based on our beliefthat Amazon’s rate of growth will slow considerably in calendar 2001,without sufficient visibility on future profitability,” wrote Banc ofAmerica analyst Tom Courtney.

Courtney, who maintains a “market performer” rating on Amazon, said investorswould do well to “avoid the stock.”

“Although it may have one last run going into the holiday period, we believethat Amazon has several red flags that demand investor attention,” Courtneywrote. Among them, he said, are a slowdown in the rate of growth at thecompany’s core business, big losses in its early-stage businesses, and adecline in the number of repeat customers.

Analysts at S.G. Cowen also reportedly made cautionary comments aboutAmazon, saying a slowdown in overall consumer spending and competition frombrick-and-mortar retailers could curtail growth.

The comments came as Amazon announced yet another product offering, sayingit plans to sell wireless phones over its Web site. Analysts have questionedthe company’s expansion strategy, saying it could have a hard timeachieving profitability even as it expands.

Amazon’s third-quarter results showed “surprisingly large losses” for itsearly-stage business section, wrote Banc of America’s Courtney.

Excluding the Amazon Commerce Network, the segment lost US$82 million to $100million, for an operating margin of negative 82 percent, he wrote.

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