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Tech Industry

Amazon plays offense amid analyst onslaught

Amid growing pessimism and a severely depressed stock price, Amazon treasurer Russ Grandinetti talks up the e-tailer's prospects to a skeptical crowd of analysts.

    VAIL, Colo.--After weathering a severe beating from Wall Street critics, beleaguered e-commerce giant Amazon.com went on the offensive today when a bullish senior executive delivered an upbeat report to skeptical analysts.

    Amazon treasurer Russ Grandinetti told about 50 analysts gathered at an industry conference in Vail, Colo., that the company is doing a "super job" in virtually every business segment, from improving shipping margins to preparing for the onslaught of orders for the upcoming holidays.

    In particular, Grandinetti said, the company is poised to reap a windfall as it expands in Europe, where labor and real-estate costs are higher than in the United States. That means Amazon, which maintains 4 million square feet of space for inventory but doesn't have any traditional showrooms, has a tremendous advantage relative to its brick-and-mortar competitors. Wal-Mart and other retailers require vast amounts of land and dozens of employees for each outlet.

    Grandinetti also assured analysts attending the Pacific Crest 2000 "e.conference" that Amazon has solidified its supplier and distribution relationship with Toys "R" Us, which will provide all toy-related inventory for Amazon this Christmas.

    As a result, Amazon will not have to purchase or store any toys until customers have already ordered and paid for the goods--a major improvement over last year, when the company was forced to postpone some shipments. Toys are one of Amazon's most competitive segments, and many analysts have questioned whether Amazon should have expanded into the low-margin niche.

    Grandinetti also boasted that author Stephen King picked the Seattle-based company to process the voluntary payments of customers who recently began downloading his online horror novel, "Riding the Bullet." And he noted that Amazon will have at least $1 billion in cash at the end of the year.

    "I'm going to hit this dead horse a couple of times," Grandinetti said as he whizzed through a PowerPoint presentation studded with rosy statistics. "Rumors of our death are perhaps more exaggerated than some might think."

    But it's difficult to exaggerate the demise of Amazon's stock, once among the most vaunted darlings of business-to-consumer stocks. Shares were at $34.81 in midday trading today, up $1.13, or 3.34, percent from Friday. But that's still less than one-third of its 52-week high of $113.

    And why did numerous high-profile analysts, including one-time booster Henry Blodget of Merrill Lynch, downgrade the company in June and pen scathingly pessimistic statements about its prospects for the future?

    "In the near term, the market measures. In the long term, the market votes," Grandinetti said, predicting that Amazon, which is estimated to become profitable in late 2001, will bounce back. "I can't control the stock price. But I can run a great company."

    By the end of his 30-minute session, Grandinetti was on the defensive as he ended his speech 10 minutes early to "answer all the negative questions I know you have." He became visibly steeled when attendants began peppering him.

    He was coy when asked about whether the 7,600-person company, which laid off 150 workers earlier this year, would lay off more employees. The company grew from roughly 2,200 workers in early 1999 to more than 7,700 in 2000, prompting many critics to call it bloated.

    "Layoffs--it's an interesting question," he said. "We have no expectation in the company for layoffs?but you probably expected me to say that."