Can Amazon Make It?

Since the beginning of the year, it has been evident that Wall Street has become disenchanted with its former Internet darling, Amazon.com Inc. Sure, Amazon still had its impressive customer base, over $1 billion in cash, and expanding sales. But as with the smaller dot-coms, Amazon seemed a long way from profitability and was boasting an increasingly unjustifiable valuation. Top tech-fund managers began to reduce and even eliminate Amazon from their portfolios. It was the end of Amazon's fairy-tale existence as the one e-tailer with seemingly unlimited prospects. After hitting a peak of 106 11/16 on Dec. 10 and trending downward until mid-June, Amazon's stock price appeared to settle into a trading range between the mid-40s and mid-50s.

HOLY WAR. Nonetheless, Amazon still had plenty of true believers among investors and the equity analysts. For them, it was the world according to Amazon CEO Jeffrey P. Bezos: The dot-com's balance-sheet negatives could be easily overlooked. Why? Because the company went into the red to build up a dominant position in e-commerce, and as triple-digit growth rates and expansion into new product lines led to far heftier sales, Amazon would eventually cross over into profitability.