Mid to Long Term View - how well can this stock perform

Copied from Bloomberg.co.uk

Seattle, Dec. 26 (Bloomberg) -- Shares of Amazon.com Inc., the world's largest Internet retailer, fell 7.2 percent on concern that curbed consumer spending hurting traditional stores may extend to online sellers.

The retailer reported its busiest holiday season ever, with more than 56 million items ordered, including record one-day sales on Dec. 9, when 20 items a second were ordered. Amazon.com didn't release a comparison with last year, when it said 37.9 million items were ordered from Nov. 9 to Dec. 21.

Consumers concerned about the economy have trimmed spending, leading analysts to predict traditional retailers may have their smallest holiday sales gain since 1970. Wal-Mart Stores Inc. said sales at its U.S. stores open at least a year will be less than forecast. Seattle-based Amazon.com has forecast a fourth-quarter sales increase of 19 percent to 28 percent.

``Amazon for the most part is down on general concerns about weakness in consumer spending,'' said Darren Chervitz, who helps manage more than $30 million at Jacob Asset Management, which holds shares of Internet companies. Chervitz owns no Amazon.com stock.

Amazon.com declined $1.58 to $20.30 at 4 p.m. New York time on the Nasdaq Stock Market. The stock had doubled in 2002 and remains the best performer in the Nasdaq-100 Index this year.

The company, like traditional retailers, is holding an after- Christmas sale. Amazon.com is featuring discounts of as much as 25 percent on electronics and up to one-half off of kitchen and houseware merchandise.

Busy Holiday

``They are this huge online power,'' said Lisa Strand, analyst for NetRatings Inc., an Internet research company. She said online merchants benefited from 13 percent more people shopping on the Internet compared with last year and from Web stores getting a greater percentage of shoppers' overall gift budgets.

Amazon.com said it shipped more than 99 percent of holiday orders on time this year, or roughly the same rate as in 2001.

Amazon.com, which plans to give fourth-quarter results Jan. 23, had net income of $5.09 million, or 1 cent a share, in last year's holiday quarter.

Fourth-quarter sales will rise this year by 24 percent to $1.39 billion from $1.12 billion, according to eight analysts surveyed by IBES International Inc. The company will break even, excluding some costs, after a loss of 16 cents a share a year ago, analysts surveyed by Thomson First call estimate.