Jeff Bezos' Lesson in Hinduism By Steven Zeitchik
The company that rode Henry Blodget's bullishness to fame today learned what else can happen when anxious investors listen too closely to analysts. Acting on comments from Morgan Stanley Dean Witter's Mary Meeker and the projection of a Lehman Brothers analyst, investors dumped the stock like a stack of old Time magazines. The price fell $8.13 to $33.88, a drop of just under 20 percent.
CNBC knocked down the first domino when it reported that Meeker made "cautious" comments about Amazon.com (AMZN) in an internal call with her sales force. According to numbers cited by Katherine Hobson of the NYTimes.com/TheStreet.com (TSCM) , Meeker said that there "won't be any upside to her revenue estimates of $600 million for the second quarter and $650 million for the third quarter. Perhaps more important, she said there could be 'modest downside,' according to an investor who has seen a note on the remarks."
Sound benign? It wasn't. "The nasty and brutish reaction to Meeker's remarks only highlights the skittishness among Internet investors who, if nothing else, could count on e-tailers to post big sequential jumps in revenue," Hobson wrote.
The Wall Street Journal Interactive thought Meeker's own persona might have had something to do with it too. "Market participants said Friday that Ms. Meeker's comments were merely cautionary, but adding that because she is generally seen as a bull on Internet stocks, the market interpreted her comments negatively," it said.
Many outlets also nodded to a Lehman report that Amazon had "extremely weak and deteriorating credit" as a reason for the dump.
Curiously, CNBC ignored Meeker in its market round-up. Bloomberg, too, relegated the MM factor to the bottom of its story and played up Lehman ... "Amazon.com has $1.08 billion in cash and is using up $115.7 million of that a month, according to data compiled by Bloomberg, meaning it could run out of money in nine months," the service wrote.
Might it be time for Amazon to further scale back its marketing? Perhaps. Or maybe it's simply time to invest in a boomerang company.