Amazon up on speculation about 'significant announcement'

2 min read

Amazon.com (Nasdaq: AMZN) shares shot up 14 percent Monday after the online retailer said it will make a "significant announcement" at 9 a.m. EST Tuesday. Speculation surfaced about a possible Amazon move into software sales or a foray into home and gardening.

Shares were up 8 5/8 to 73 9/16 at 12:45 p.m. EST. In a media advisory, Amazon said it will "make a significant announcement regarding additions to its product line that will impact the competitive landscape of online shopping."

In addition, Jeff Bezos, Amazon CEO, Joseph Galli, chief operating officer, and David Risher, vice president of product development, would be on hand to "discuss the online holiday shopping season, which is expected to show siginficant growth over 1998."

That vague announcement was all investors needed to crank up the rumor mill. Dow Jones reported that Amazon may be announcing a deal with Home Depot, citing one analyst, who wished to remain anonymous. The analyst said the company, which has been eyeing entry into the home and garden category, may announce a partnership with Home Depot Inc. (NYSE: HD).

The article also quoted Home Depot spokeswoman Carol Schumacher as saying that "We are not involved in the Amazon announcement and you'll have to talk to Amazon.com. We have had some very preliminary, casual discussions, but nothing specifically. They didn't go anywhere." Home Depot shares were up 5/16 to 78 5/16.

An old rumor about a deal with Beyond.com (Nasdaq: BYND) also resurfaced. A spokeswoman for Beyond.com said she was not aware of any announcement between the two companies. Amazon.com refuses to comment on rumors. Analysts contacted by ZDII declined to speculate on the rumors, saying only that the company has kept its secrets well.

In any case, Amazon could use the boost. Amazon shares have struggled for momentum since the company announced plans to ramp up its infrastructure spending. Amazon, like other e-tailers, have decided to beef up their services for the shopping season, delaying short-term profit.

BancBoston Robertson Stephens' eTailDEX fell for the fourth straight week to 1,062.81, down 10 percent from 1,186.45 last week. "We believe the market has caught a fairly severe case of post-reporting season syndrome," said analyst Lauren Cooks Levitan in a research report. "Amazon, eBay (Nasdaq: EBAY), eToys (Nasdaq: ETYS) and others set an ugly pattern of reporting better-than-expected results, reflecting strong consumer demand and solid momentum, offset by almost universal increases in operating expenses."