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While delivering a keynote address at PC Expo on Wednesday, Amazon.com Founder and CEO Jeff Bezos blasted a recent analyst report that the mammoth e-tailer might soon run out of cash.
The report contributed to a sharp sell-off last Friday, sinking the stock to 33 7/8 -- or less than a third of its all time high of $113 (US$).
"On Friday, there was a single analyst who wrote a report which isn't correct, without even calling us -- predicting we would be out of cash by I think December, or something like that," Bezos reportedly told a gathering of about one thousand people.
"We have a billion dollars in cash," Bezos added. "We actually expect to generate a cash flow from operations through the rest of this year, not use cash flow operations. So it's wrong. Encourage analysts to call the companies before they make such comments."
Amazon Could Miss Revenue Forecasts
On June 23rd, Lehman Brothers analysts commented on Amazon's corporate bonds, saying, "We find the credit extremely weak and deteriorating."
The report -- which drew information from Amazon's filings with the U.S. Securities and Exchange Commission (SEC) -- said the company had a weak balance sheet, poor working capital management and massive negative cash flow.
"[These are] the financial characteristics that have driven innumerable retailers to disaster through history," the report noted.
From 1997 until its most recent quarter, Amazon has received $2.8 billion in funding, while its revenues have been $2.9 billion -- or 99 cents for every dollar of merchandise sold, according to the Lehman Brothers report.
On the heels of the Lehman Brothers report, analysts from both Morgan Stanley Dean Witter and Merrill Lynch also said they do not expect Amazon to show any upside in the upcoming quarters, and suggested that the company might miss its current revenue forecasts altogether.
Segment Profitability?
Bezos declined to offer any estimate as to when the company might turn a profit, but he said that the company's largest segment -- U.S. books, compact discs, DVDs and videos -- is expected to show a profit for 2000.
"If people think we're in the middle of a capital crunch, they are crazy," Bezos said.
The segment totaled $400 million in the first quarter and posted an operating loss of $2 million, accounting for 69.7 percent of the company's $574 million in revenue.
Still, it appears that Bezos and some other Amazon insiders chose to sell some of their shares before their stock fell to its recent low. According to SEC filings, three insiders -- including Bezos -- sold a combined total of 432,650 shares at $53.75 to $58.81 per share from May 1 through May 16, 2000.
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