The negative publicity caused Amazon’s share price to fall 20%
on Friday to an 18 month low. Its market value is approximately $10
billion, one quarter of its market value just six months ago.
Mary Meeker, analyst with investment bankers Morgan Stanley,
said that there was “no upside” to Amazon’s revenue estimates.
Wall Street analyst Ravi Suria wrote, “Negative cash flow, poor
working capital management, and high debt load in a
hyper-competitive environment will put the company under extremely
high risk” of running out of cash early next year. He added that
the company is also facing significant interest payments for nearly
$2 billion in debt.
Amazon has been in debt since 1997, having gone on-line in 1995.
Since 1997, it has received about $2.8 billion in funding with
revenues of only $2.9 billion. However, the company dismissed the
reports of it running out of cash as “pure, unadulterated hogwash”
and added that it is “nowhere near running out of cash.”
The negative reports affected the whole US internet share
market, with Yahoo, eBay and AOL suffering heavy losses.
