That new phenomenon was on full display last week, when it seemed Amazon's fortunes had finally turned. For the first time in months, investors had reason to cheer: The company announced that its losses during the first quarter would be smaller than expected. Shares jumped an impressive 75 percent, albeit the rebound was from a 30-month low of $8.37. Amazon credited efficiency improvements for the healthier bottom line.
Yet several analysts and market watchers remain skeptical. Amazon's report, they note, was preliminary and lacked important details. The report did make some points starkly: Sales growth in its biggest and only profitable businesses - books, music and video - has stalled. Meanwhile, analysts charge that Amazon's fastest-growing business, consumer electronics, is not making money. Bezos does little to dispel that notion. [See "Consumer Electronics Conundrum."] "We love the economics" of the consumer electronics business, he insists. But when pressed on whether it makes money, Bezos replies, "We don't break it down to the category level."
It's that reluctance to disclose details that has stoked criticism. Despite assurances that it has plenty of cash to pay its bills, Amazon has sought to discredit former Lehman Brothers analyst Ravi Suria, who in February raised the specter of creditors squeezing the company. Several news reports suggest some of the retailer's suppliers are doing just that, a point Bezos vehemently denies.
But Amazon has failed to respond to repeated invitations from the New York Society of Securities Analysts to offer assurances that the company's financial house is in order. Recently, Amazon sought to buy Evite, a party-invitation Web site, and tried to close the deal in time for first-quarter reporting. Why? Partly to get the few million dollars Evite had left on its own balance sheet, according to people familiar with the matter. Ticketmaster eventually bought Evite, and Amazon executives decline to comment on the situation. What's more, many analysts are tired of what they call Amazon's creative math, charging that the company's own forecast for fourth-quarter pro-forma operating profits hides what will be significant net losses.
Amazon still has its true believers. Some Wall Street investors who have been buying Amazon for months expect it to rebound, and they hope to make a killing on its depressed shares. [See "Amazon's True Believer."]
