Amazon.com solvency questioned by analysts
Associated Press
SEATTLE — An influential group of security analysts has sent a second letter to Amazon.com chief executive Jeff Bezos, demanding that the Internet retailer reveal more financial information to put to rest fears that it might go bankrupt.
The New York Society of Security Analysts' Committee for Corporate Governance sent the new letter last week because of concerns over Amazon's public response to an initial letter the committee sent March 8.
Amazon spokesman Bill Curry dismissed the concerns the analysts have raised.
"We provide ample amounts of information to the public," Curry said Friday.
In the first letter, Gary Lutin, committee co-chairman, said Amazon has insisted it has enough money to survive the year, but has failed to back that up with detailed numbers.
"The information being provided is not sufficient to reconcile estimates and pro-forma numbers with reality-based facts," Lutin, an investment banker, said in an interview Friday.
Lutin said Bezos did not respond to the committee's letter.
The society's membership includes some of the most influential analysts on Wall Street, who commonly examine companies' financial information — and grill their corporate officers — in minute detail. The analysts' opinions are used by investors in deciding whether to buy or avoid a stock.
In an interview with the Seattle Post-Intelligencer last week, Curry said Bezos does not have time to deal with complaints such as those raised by the society. Curry said the March 8 letter was "in a stack with a whole lot of other letters we have received."
That alarmed Lutin, prompting the second letter sent Thursday. He said Curry's responses "are not consistent with generally accepted standards of management responsibility to shareholders or to investors."
On Friday, Curry confirmed that Amazon has received both letters but would not say whether the company had responded.
The security analysts' society holds regular forums to discuss investment issues. Late last year, the organization put together a forum looking at Internet and other high-tech companies' accounting practices and invited Amazon executives to participate.
The Seattle-based Internet retailing giant took part in several meetings by telephone, Lutin said. Then, in February, Lehman Brothers' analyst Ravi Suria released a report saying the company did not have enough money to survive 2001.
Amazon got a copy of the report before its release, and sought to persuade Suria to change his findings.
The New York Times reported last week that Bezos is under possible Securities and Exchange Commission investigation for selling stock after seeing the report but before it was released publicly. Suria had released an earlier report critical of the company that sent the stock plummeting.
Amazon has said it will reach pro forma operating profitability for the first time by the fourth quarter of 2001.
That doesn't mean the company will cross over into the black, however. Rather, it means it will report a profit after excluding many costs, such as stock options, acquisitions or losses from investments. In the fourth quarter of last year, the company reported pro forma losses of $90.4 million. Without excluding such costs, the net loss was about $545 million.
After Suria's February report came out, Lutin said the committee asked Amazon to participate in another forum to explain why it thought Suria's findings were false. Amazon declined.
Amazon has repeatedly said Suria's findings are erroneous, but Lutin said the committee did not think Amazon had supplied the data to refute the report.
