There was plenty to like in Amazon's earnings report. The year-over-year fourth quarter numbers pan out like this: Sales soared 167% to $676 million. Sales of books reached $319 million, an increase of 66% from the same period last year. Music sales were $78 million, up 136%, and video sales were $64 million, up 500%. They continue to crush the competition in books and music -- barnesandnoble.com (Nasdaq: BNBN) is posting fourth quarter sales of $70 million, while CDNow is expected to have quarterly sales of $56 million.
Bear Stearns thinks Amazon has become one darn "Attractive" stock; Merrill Lynch, J.P. Morgan and CIBC World Markets think it's worth a "Buy;" and Banc of America and Credit Suisse First Boston stomped on the tables with a "Strong Buy."
Ever wonder about those analyst ratings? Figuring out how they correspond to some analysts' actual nomenclature can be quite a challenge. As Tim Thurman (TMF DrT) muses, if a stock is Attractive, between a Buy and a Hold, what are we supposed to do? Stand by and merely admire it, as if it were in a gallery? How about the stock that has been downgraded from a "Buy" to an "Accumulate?" How are we to accumulate it without buying?
Trying to understand the distinctions in ratings can make an investor crazy. Which is one of the reasons Fools try to rely primarily on themselves to understand earnings information. Especially considering that given any particular set of facts, any two people can make a successful bullish or bearish argument. (Just check out our Dueling Fools feature as an example.)
When the Duke of Mantua sings in Verdi's Rigoletto that "La donna e mobile" (women are fickle), he clearly never checked the records of Wall Street's analysts (analizzatore e mobile?). On September 9, 1999, CIBC World Markets started coverage of Amazon with a "Buy" rating. Then, on October 28th, less than two months later, they downgraded Amazon to a "Hold." Nothing really changed in that period -- Amazon still was planning to lose money as it ramped up for the future.
Going back even further, on September 1, 1998, Merrill Lynch started coverage of Amazon with a "Reduce" rating. On that day, Amazon's price was a split-adjusted $13.19 a share. Six months later, on March 10, 1999, they restarted coverage of Amazon with an "Accumulate/Buy" rating when it was trading at $68.56 per share. Any investors who had followed their advice and reduced their position would have missed out on a potential 420% gain in just six months.
Fools know that it's impossible to time the market. Making short-term calls may help you reduce some losses occasionally, but it may also keep you out of the stock when there's positive news that may make the stock soar.
"The year 2000 could be most significant," Bezos said. It will be the year that the company will "visibly demonstrate its long-term potential," as "Earth's most customer-centric company."
We Rule Breaking Fools will dust off our comfy cushion and begin to enjoy the ride as we HOLD onto our shares.
When PE Celera Genomics Corp. (NYSE: CRA) joined the Foolish fray on December 17, 1999, there was some ambiguity as to its ability to meet Rule Breaker Rule #6: A recent constituent of the financial media has recently called the company "grossly overvalued." While there had been some journalists who questioned Celera's valuation and wondered how the company would ever generate profits, no one came straight out and attacked the stock.
A front page article in the Business Section of The Wall Street Journal mentions that Stuart Weisbrod, portfolio manager for the Merlin BioMed Group, is short-selling Celera because as hard as he tries, he can't figure out how the company is going to make money.
For Foolish speculation and potential thoughts on CRA's ability to transform its discoveries into profits, review our CRA Buy Report. Then visit our CRA Message Board and share your thoughts with other Fools.
Finally, David Gardner is conducting an on-line seminar devoted to Rule Breaker investing which has generated a lot of excitement. If you have personal investment stories that you would be comfortable sharing regarding your participation and success in the Rule Breaker strategy, please drop an e-mail to Fool Jamie Patten at firstname.lastname@example.org and provide her the details. You may find your name under the Rule Breaker's bright lights!
And don't forget to check out our special Tax Area to help you legally celebrate all your Rule Breaking successes.