Amazon Stumbles on Analyst Warning

Amazon.com, Inc. (Nasdaq: AMZN) was down 19 U.S. cents at $14.25 in morning trading Tuesday, after a Lehman Brothers bond analyst said the company could face a cash crunch later this year.

Ravi Suria, vice president of convertibles strategy at Lehman, said Amazon's latest quarterly results "have only increased our concerns about tightening liquidity."

The company's working capital has been declining since a debt offering in the first quarter of 2000, and is likely to "dip into negative territory" this year without an additional infusion, Suria wrote in a research note.

"We believe that the low levels of working capital could trigger a creditor squeeze in the second half of the year, creating considerable downside risk to revenue and cash estimates for the second half," the analyst wrote.

Suria said investors should continue to avoid Amazon convertible bonds.

Last month, Amazon reported a fourth-quarter loss that was smaller than expected, and said it would cut 15 percent of its staff in a bid to cut costs.

Amazon reported an operating loss of 25 cents per share for the fourth quarter which ended December 31st, a penny better than analysts predicted. Sales for the quarter rose 44 percent from a year earlier, to $972 million.

However, the company also lowered revenue estimates for the current year, citing an economic slowdown. Amazon said it expects a $150 million charge to earnings during the first half of the year to cover the layoffs.

Overall, the company said that it added almost 13 million new customers last year, thanks to growth in its international business and its newer product segments. Sales at the company's core division of books, music and video grew 11 percent in the fourth quarter.