March 24, 1997 5:00 PM ET
Read all about it: Amazon.com readies public offering
By Margaret Kane

  Internet bookstore Amazon.Com Inc., having girded itself for Web war, today registered with the Securities and Exchange Commission for an initial public offering of 2.5 million shares.

The filing follows last week's strategically timed move by Amazon to double the size of its online catalog and cut prices. The Seattle, Wash., virtual bookstore boosted its catalog to 2.5 million books and announced it would discount some books by 40 percent off list price, the day before Barnes & Noble went live on America Online.

Amazon is going public at a time when the bloom is off the rose of Internet companies. A year ago, just about any company that went public with the word Internet somewhere in the prospectus could be virtually guaranteed to make a killing, but investors have soured on many of those companies, because few have turned a profit.

"People were smoking Internet inhalant. Some of the prices being paid were ludicrous," said Bill Bass, analyst at Forrester Research Inc., in Cambridge, Mass. "That kind of ridiculous frenzy has tailed off, but that doesn't mean that some of these companies might not be the next Microsoft."

Although Bass said Amazon would be better off without Barnes and Noble or Borders Bookshops, which also is planning to sell books on the Web, he said competition wouldn't necessarily kill the company.

"Distributing on Internet and becoming a catalog is dramatically different [than what booksellers have been doing]," he said. "Sometimes, having a lot of cash is not a great advantage. [People] focused on making the Internet work-because if it doesn't, they don't eat-have an advantage over people who see it as a sideline."

Amazon officials could not be reached for comment, and the company's press release did not say when the shares would be offered or how they would be priced.

Although Amazon hasn't released its financials, CEO Jeffrey Bezos has said that the company needs to invest now to make the business bigger down the road. But analysts pointed out that the company's business model is relatively simple.

"This is a retailer taking use of some of the advantages that electronic retailing offers, most notably inventory management and direct marketing. It's a great company," said Scot Ehrens, vice president at Oppenheimer & Co., in New York.

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