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Jon Friedman's Media Web Archives | Email alerts
Jan. 5, 2012, 12:01 a.m. EST
By Jon Friedman, MarketWatch
NEW YORK (MarketWatch) "” Is Amazon.com Inc. going to be known as the Netflix Inc. of 2012?
Last year, Netflix /quotes/zigman/87598/quotes/nls/nflx NFLX -0.21% was the poster child for the public companies that couldn't get out of their own way. It callously raised prices for its content at a time when consumers were cost-conscious. When the customers protested, the company apologized but it was too late to put out the fire on Main Street, as 800,000 subscribers walked away. Wall Street noticed. Netflix's stock plunged 77% off its July high.
It would be precipitous today to suggest that Amazon should be designated as the new Netflix. But the stock market isn't known for fairness or sentimentality, and Amazon's recent performance has raised questions about its prospects.
If Amazon isn't careful about managing its reputation, it could begin to resemble One of Those Stocks, in which you kick the tires extra hard to make sure that everything is OK.
CBSMoneyWatch on Jan. 3 published a piece with the telling headline of: "If You Don't Own Amazon, Don't Start Now." It suggested that Amazon's "current sky-high valuations" made it appear to be a "risky investment."
Hmmm.
Oprah Winfrey's return to a talk-show format Sunday night drew 1.1 million viewers to her year-old cable network, Sam Schechner reports on Lunch Break. Photo: Getty Images.
As recently as last Oct. 14, Amazon's executives must have felt like the royalty of Wall Street "” and deservedly so. The company's shares had climbed to an all-time high of $246.71. It was a testament to convincing management and marketing strategy, as the online retailer showed it could continue to evolve and meet the demands of the of the digital revolution.
Within weeks, everything changed, though. Amazon's third-quarter earnings results severely missed Wall Street's estimates. The punishment was swift and decisive. The company's shares promptly tumbled 17% in after-hours trading. Through Dec. 30, Amazon's shares had plummeted 30% off their high point.
Further, Goldman Sachs has warned that Amazon could miss its fourth-quarter projections because of a deterioration in the growth of online shopping "” even taking into account the impressive sales of Amazon's Kindle Fire tablet.
It would be a mistake to write off Amazon. Chief Executive Jeff Bezos has moved aggressively into the tablet arena, and has a reputation for steering Amazon beyond the simple three-month horizons of Wall Street and taking the long view.
So, what should investors make of Amazon? They'll have to decide whether Amazon is truly a well-managed company that has a foothold on digital technology or a cautionary tale for 2012.
MEDIA WEB QUESTION OF THE DAY: Is Amazon's stock a buy or a hold or a sell right now?
What do you think? Feel free to comment below.
Jon Friedman is a senior columnist for MarketWatch in New York.
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Jon Friedman, MarketWatch's media columnist based in New York, writes the Media Web column. Before joining MarketWatch in 1999, Friedman was a reporter for... Expand
Jon Friedman, MarketWatch's media columnist based in New York, writes the Media Web column. Before joining MarketWatch in 1999, Friedman was a reporter for USA Today, BusinessWeek, Bloomberg News and Investors Business Daily. He is the co-author of the expose "House of Cards: Inside the Troubled Empire of American Express" (1992, Putnam). His freelance pieces have appeared in the New York Times, the American Banker and other publications. He appears frequently on television and radio programs to discuss news issues, and in 2010 he launched the Web TV show, "Media Matters with Jon Friedman." Collapse
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