Mark Rowen Company Quotations

We anticipate $601 million in total revenue and $385 million in U.S. book, music, video revenue from Amazon in the third quarter, ... Our $385 million books, music, video projection is flat with second-quarter results; however, if Amazon's sequential revenue growth in the sector actually comes in at 12 percent or higher, we believe the company could record as much as $650 million in total revenue.

With 2001 revenue growth rates now expected to be in a range of 9 to 18 percent and earnings per share growth expected to be negative 12 to 33 percent, we believe Yahoo!'s price-earnings multiple will contract until the company is able to demonstrate significantly higher growth rates.

We think that this merger is going to create a very powerful company. It's the largest online travel agency in the largest online retail sector. We think at these price levels, it is severely undervalued.

Although the deal is a psychological boost for Amazon, it does nothing to address the key strategic issues the company faces: namely, a lack of growth in its profitable boom, music and video segment, and a lack of profitability in its fast-growing consumer electronics business.

In our opinion, such massive increases in active customers, coupled with massive increases in lifetime value, will be enormous challenges for a company with such high rates of customer defection.

In our sum-of-the-parts valuation, we estimate that intrinsically, the stock could be worth as much as $27 a share, if all of the value were unlocked, ... While its is unclear whether management will choose to or be able to unlock some or all of this 'hidden' value, the company stated that it is conducting a strategic evaluation on all of its assets.

In theory, in order for free shipping offers to be successful, the company would have to generate enough incremental revenue and contribution profit to pay for the cost of the shipping promotion. However, we believe Amazon.com has consistently failed to generate anywhere near the amount of incremental revenue and profit needed to pay for the lost shipping fees.