Its business model is like that of a free newspaper, providing such services as stock quotes, news, weather, and shopping, and making money from advertising. Amazon is starting to earn money on its older businesses such as books, but it is losing money overall because it is still spending heavily to expand to such new businesses as tools, electronics, and kitchen goods. The company spent millions last year to build five new warehouses and has to manage inventories of an ever wider array of merchandise. Although most of that will eventually convert back to stock, the borrowing has raised hackles among bond analysts. That's a tough question.
Nobody really knows.
Most analysts think Amazon may be profitable in late 2001, but they worry that profits won't ever be large enough to justify a high stock price. It's the business everyone wants. But concerns about online advertising run deep. Traditional banner ads have for the most part proved ineffective. Four years ago, nearly 5 percent of Web surfers would click on banner ads.