Amazon.com Could Fall on Negative Report

Shares of Amazon.com Inc., the largest Internet retailer, could drop today after Barron’s questioned its ability to compete as publishers and other companies begin to sell their products directly on the Internet. Amazon.com is starting to sell music and medicine, but those businesses have lower profit margins than its book business, Barron’s said. Amazon’s book sales increased at a slower pace in 1998 than in the previous year, the paper said. Amazon.com, which sold its first shares to the public in 1997 at $18 apiece, traded as high as $221.25 in April; its shares have fallen 39% in the last month. The firm has yet to make a profit while boosting spending on promotions and new services to build its name. It also added several warehouses nationwide, the paper said. Barron’s said the company would be threatened by the Web sites of publishers and recording companies. It also would be challenged by traditional retailers such as Wal-Mart Stores Inc., which have more cash than Amazon.com. On Friday, Seattle-based Amazon.com shares rose $4.19 to close at $118.75 on Nasdaq. U.S. markets were closed Monday.