______________________________________________________________
INTERNET STOCK NEWS [tm]
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Internet Stock News Outlook 1/24/2002: Amazon.com: Heads Up
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AMAZON.COM: HEADS UP

There is more to the story than the net penny Amazon.com's
(AMZN) accountants managed to squeeze out of the Q4 2001
income statement.  For many months investors' and analysts'
attention was fixed on the bottom line, and it still holds
a lot of ambiguity. The first quarter of both pro forma and
GAAP net profit for Amazon.com is a clear signal that the
top line growth is no longer to be ignored. On-line
retailing business in the States is young, controversial,
but definitely serious.

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Amazon.com believes its annual sales cycle is more or less
established. The company's guidance for 2002 repeats 2001.
Sales for this year's first quarter are projected to be 28%
down from the Q4 2001 which is exactly the last year's
change for the same period - between Q1 2001 and Q4 2000.

The "surprise" sales surge in the retailers' strongest
fourth quarter came after three consecutive quarters of
declining sales. The company has had equal or even bigger
Q4 versus Q3 surges like the 90% surge in 1999, or the
74.3% in 1997, but it has never recorded three consecutive
quarter of declining sales. Still, the annual revenues rose
13% in 2001 over 2000 and if Amazon.com's management
decides this cycle works well for the bottom line, the
pattern may continue through 2002 - three slow quarters
plus an all-out campaign in the winter shopping season. The
top line growth is by no means limited. Amazon.com is among
the few American on-line retailers seeking expansion in
Europe and Japan. This strategy was rewarded by overseas
sales being one of the main growth drivers in Q4 2001.

As for Amazon.com's pro forma earnings goals and results,
they have very little to do with the top line growth.
Historically, Amazon.com's pro forma operating profit
fluctuated between -26% and 5.3% of revenues and in the
past quarter it was -1.4%. This explains why Wall Street's
estimates constantly go wide of Amazon.com's actual
earnings.

The company acknowledged its GAAP net profit of one cent
was decided by the currency exchange rate. The premium on
its 6.875% convertible subordinated notes is recalculated
each quarter. They were issued February 2000, when the Euro
was 10 cents stronger.

These among other factors can and will affect Amazon's
results in the quarters to come. A current snapshot of
Amazon.com, however, shows a profitable retailer with a
2013% 5-year revenue growth - to $3.12 billion in 2001 from
$148 million in 1997.

Even more important, Amazon.com's sales exploded without
hurting or killing the market. On-line retailing, like
mail-order in the past, was one of those things that "will
never work". Pessimists thought the "see and touch"
attitude, the "instant gratification" at bricks-and-mortar
shopping malls and shipping charges will deny on-line
retailers their customers. On-line retailing, however, grew
by presenting itself as an enhancement and not an
alternative to traditional shopping. The time is ripe to
see on-line retailers not as survivors from some terrible
crash in the past, but as true market-makers of today.

ISN tracks the performance of companies with products or
services influencing the development of the Internet as a
market. The list will be continuously revised and updated.


Name (Ticker)                               Stock Price
                                           (% Change 2002)

MarketWatch.com, Inc. (MKTW)                        24%
eUniverse, Inc. (EUNI)                              22%
Multex.com, Inc. (MLTX)                             21%
Amazon.com, Inc. (AMZN)                             14%
Hoover's, Inc. (HOOV)                               10%
barnesandnoble.com inc. (BNBN)                       5%
LookSmart, Ltd. (LOOK)                               3%
Global Sources Ltd. (GSOL)                           2%
priceline.com Incorporated (PCLN)                    1%
FTD.COM INC. (EFTD)                                  0%
Yahoo! Inc. (YHOO)                                  -1%
Comcast Corporation (CMCSK)                         -1%
DoubleClick Inc. (DCLK)                             -2%
VeriSign, Inc. (VRSN)                               -4%
WebEx Communications, Inc. (WEBX)                   -4%
Microsoft Corporation (MSFT)                        -5%
E*TRADE Group, Inc. (ET)                            -5%
TMP Worldwide, Inc. (TMPW)                          -7%
SBC Communications, Inc. (SBC)                      -8%
FreeMarkets, Inc. (FMKT)                            -8%
eBay Inc. (EBAY)                                   -11%
Sun Microsystems, Inc. (SUNW)                      -14%
Check Point Software Technologies Ltd. (CHKP)      -14%
1-800-FLOWERS.COM, Inc. (FLWS)                     -16%
CNET Networks, Inc. (CNET)                         -16%
Travelocity.com Inc. (TVLY)                        -18%
AOL Time Warner, Inc. (AOL)                        -28%
Homestore.com, Inc. (HOMS)                         -28%
VerticalNet, Inc. (VERT)                           -30%
Akamai Technologies, Inc. (AKAM)                   -31%
McAfee.com Corporation (MCAF)                      -41%


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the secrets of ChangeWave investing.  The strategy that has
delivered 75% a year growth since 1995-including the Nasdaq
crash of 2000-2001.   Sign up for Tobin Smith's FREE e-mail
seminar "Profiting From Change" and get session #1 now at:
http://www.changewave.com/reg/?p=a&c=4CAW024
----------------------------***-------------------------------


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INTERNET STOCK NEWS (ISN) (c) 2001
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