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Amazon estimate lowered
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September 11, 2000: 10:56 a.m. ET
Merrill's Blodget, longtime bull on Web retailer, cites 'awkward transition'
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NEW YORK (CNNfn) - Merrill Lynch analyst Henry Blodget, a longtime bull on Amazon.com, lowered his quarterly and fiscal-year earnings estimates for the Web retailer and said that the company is going through an "awkward transition" period.
In a research note issued Monday, Blodget increased his third-quarter loss estimate to 32 cents per share from 30 cents to reflect higher interest expense and said that he doesn't expect "significant upside" to his forecast. In addition, he increased his fiscal 2000 loss estimate to $1.27 per share from $1.23 and his 2001 estimate to a loss of 63 cents per share from 53 cents previously.
These revisions move Blodget closer to the consensus of analysts who follow the Web retailer. The mean analyst estimate for Amazon's fiscal 2000 loss is $1.28 per share and for 2001 is a loss of 64 cents per share, according to earnings estimate tracker First Call.
"We believe the company is going through an awkward transition from a hyper-growth, revenue momentum story to a long-term growth and earnings story," Blodget said in his research note. "Despite its growing pains, we continue to believe long-term, patient investors will be rewarded."
Amazon's stock rose $1.75 to $44.69 in mid-day trading Monday, despite the estimate changes.
Blodget said he expects Amazon to record third-quarter revenue of $600 million, which would be 4 percent above its second-quarter revenue. He expects gross margins to remain flat versus the second quarter at 23.5 percent and for operating loss as a percentage of revenue to improve to 13.5 percent in the third quarter from 15.5 percent in the second.
The Merrill analyst reiterated his "intermediate-term accumulate" and "long-term buy" rating on the stock. 
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