COMPANY BACKGROUND

The company operates as an on-line retailer of books, music and video products, offering more than 4.7 million titles via a commercial site on the World Wide Web. Amazon.com was founded in 1995 by Jeff Bezos and employs over 1,600 people. Although the company has yet to make a profit, Mr. Bezos is spending operating profits to acquire and build a much larger customer base. He expects to make some profit by the year 2002. On March 30, 1999, the company launched Amazon.com Auctions in direct competition with eBay, an online Internet auction player.

COMPETITION

By the year 2002, it is estimated that the total e-commerce sales for the United States alone will be as much as $327 billion dollars. Amazon's customer base is about 8.4 million as compared to eBay's 3.8 million customers. The online commerce market is new, rapidly evolving and intensely competitive.

Amazon competes in both the retail and e-commerce booksellers market. The traditional booksellers are Barnes and Noble, Borders, and Bertelsmann AG. At the present time, the e-commerce competitors are eBay, America Online, Inc. and Yahoo! Inc.

COMPANY PRODUCTS AND SERVICES

Amazon.com is a proven technology leader; it has developed electronic commerce innovations such as 1-Click ordering, personalized shopping services and easy-to-use search and browse features.

The Company is expanding and enhancing the customer shopping experience by actively investing in emerging internet technologies and markets through internal development, acquisitions and investments.

FUNCTIONALITY/VALUE

The secret to Amazon's success is being the most customer-focused company--both online and offline. The Web site has value-added features that make it relatively easy for browsing and shopping online. Amazon's invention of one-click ordering, eliminated time-consuming data entry with each order. Click here for a value chain diagram.

I recently ordered some textbooks online and the experience of one-stop shopping made it easy to compare prices and complete the sale as if I was at a physical bookstore.

COMPANY'S VISION FOR THE NEW MILLINIUM

During the quarter, the Company launched Amazon.com Auctions. New product offerings and other lines of business generally result in incremental increases in headcount and related costs, as well as technology and related infrastructure costs.

A new distribution center was leased and opened in Nevada during the first quarter of 1999. Subsequent to March 31, 1999, the Company leased distribution centers and is entering into leases for additional facilities. Expansion of the Company's distribution center network has and will require it to commit to lease obligations, stock inventories, purchase fixed assets and install leasehold improvements.

The Company has been active in investing in or acquiring companies that have strategic and complementary technologies and product offerings. Subsequent to March 31, 1999, the Company announced the planned acquisitions of e-Niche Incorporated ("Exchange.com"), Accept.com, and Alexa Internet. These and any additional acquisitions and investments will result in increased on-going headcount and operating costs.

The company is assessing and remediating the Year 2000 issue and expects to finalize this matter by no later than the third quarter of 1999. Amazon's information technologies for mission-critical data-processing systems have been converted in regard to the Y2K issue.

FUNDAMENTALS
The Extent to Which the Company has been a Success in the Marketplace (Relative to Its Major Competitors)

Source: S&P Personal Wealth

BUY RECOMMENDATION
We would recommend a moderate buy on the stock for investors looking for growth stocks to go in their portfolio.