But a look at the raw figures makes this dance even more astounding. The company lost $143 million in the second quarter of 1999, seven times its loss of $22 million in the second quarter of 1998. How long can this go on? The company now suggests that profitability won't occur until several years into the new millennium.
According to Michael Butler, who runs Cascadia Capital, a Carillon Point venture capital company, a lot of people in the investment community are losing patience. "There's some real disenchantment with Amazon," he says. "The company has made a lot of promises and may not be able to keep them—and that has made it more difficult for other consumer-based businesses to get funding." And while those stunning quarterly losses look OK while the stock price is rising, if the stock price falls and the losses continue, it's going to take more cajones than brains to stay with the company.
DAN LAMONT
Amazon CEO Jeff Bezos
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Amazon continues to insist that volume is everything, and Bezos is quite clear about company strategy to trade its potential current profit for new customers. Projections for Christmas spending on the Internet look rosy—up 30 percent from last year. But for Amazon, the day of reckoning is approaching. You have to wonder: Is Bezos building a bigger company or just pumping air into a leaky balloon?
What if? It's not easy to project just what the consequences of an Amazon collapse could be. Certainly the public-private partnership that occupies the old US Public Health Service building on Beacon Hill would evaporate. Dick Conway, a regional economist, isn't predicting Amazon's end—but he also says, "If you want to see what happens when a substantial sector of a regional economy tanks, look what happened to the 'Massachusetts Miracle' when the minicomputer business hit the skids in the late 1980s."
Massachusetts went from boom to bust in a period of a couple of years, the disaster amplified by an overpriced real estate market that squeezed out first-time buyers. Sound familiar? If Amazon does go south, Conway says the initial impact would be the loss of jobs. "The second impact is on wealth—all the people who have stock or stock options. Since Amazon is local, you can bet its wealth is concentrated here." Stock option wealth can evaporate quickly, though, and Conway continues, "With a market value of $21 billion, the company is no slouch. Boeing's cap value isn't much greater. While it's important for the region to promote high tech, it's not without risk."
What could be most at risk is the raft of young companies riding on the tide of Amazon hype—companies modeled on the Internet-as-consumers'-ultimate-shopping-playground paradigm. The Microsoft story is now old hat—it's Amazon that new netrepreneurs want to emulate. Also in jeopardy is the region's undercurrent of optimism, which fuels the real estate market, the car dealerships, the fine dining—all the varied ways we are enjoying our assumed wealth. Pull that assumption out of the regional economy, and what's left is a pretty big crater. In a sense, Jeff Bezos has invited us all into his shopping cart. Now we just have to hope he doesn't leave us in the parking lot.
