Last week’s announcement that Amazon.com Inc will release Senior Discount Notes, or bonds, worth $275m seems to have startled the investment community. Dow Jones reports that internet-based stocks like Amazon are forcing analysts to rethink what they learned in business school. Amazon has no tangible assets like storefronts, the report concluded, because its assets are in the virtual realm. The bond sale follows moves by Amazon’s board of directors to increase the number of common shares from 100 million to 300 million. The extra shares could be used to prevent a hostile takeover. Shareholders will vote on the share proposal at a meeting on May 28. Similarly, observers say management chose to release bonds rather than shares so as to raise revenue without relinquishing any further equity in the company. The bonds will mature in 2008. Interest will be paid semi- annually in cash from 2003. Amazon hopes to use the proceeds to retire $75m worth of debt and for general corporate purposes.
