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Thursday, 22 March, 2001, 12:40 GMT
Shareholders sue Amazon
Jeff Bezos, chief executive,
Chief executive Jeff Bezos is under fire
Amazon, the internet shop, is being sued by a group of shareholders who claim that chief executive Jeff Bezos and other executives gave "false and misleading" statements about the company's finances.

The shareholders claim that they were kept in the dark about the company's revenues.

Amazon website
One of the true internet pioneers is in trouble.
Some of the revenues which had been recorded as cash in Amazon's accounts had instead been received as "highly speculative" securities: in other words, risky stakes in other companies, according to a statement issued by the shareholders' lawyers.

The shareholders also allege that Amazon's bosses failed to let them know that the company was losing millions of dollars on investments in other companies.

Volatile stock

The court action was launched after weeks of speculation that Amazon's finances are in dire straits, and that the company might file for bankruptcy.

Last week, a corporate governance committee of security analysts in New York wrote to Mr Bezos, demanding that he reveals more financial information to halt the rumour mill.

The world's richest in technology
Bill Gates, Microsoft
Worth: $54bn
Larry Ellison, Oracle
Worth: 42bn
Paul Allen, Microsoft
Worth: $24.4bn
Steve Ballmer, Microsoft
Worth $15.3bn
Gordon Moore, Intel
Worth: 13.2bn
Michel Dell, Dell
Worth: $12.3bn
Sanjiv Sidhu, i2
Worth: $6.8bn

Source: Forbes
The demand came only days after Mr Bezos warned small investors against buying shares in dot.coms like Amazon.

"We are not a stock you can sleep well with at night. We're a volatile stock," he said at the time.

According to the lawsuit, Mr Bezos has acted on his own advice.

The shareholders allege that he cashed in more than $30m from selling shares at "artificially inflated prices" after seeing a negative analyst report before it was published.

The US stock market watchdog, the Securities and Exchange Commission, is reportedly investigating this claim.

Cash crunch

Early last month, the investment bank Lehman Brothers estimated that Amazon was running out of cash and warned against buying the company's bonds.

The Lehman analyst Ravi Sura met ridicule by Amazon when he issued a similar warning last summer, and the company repeated this response in February.

Amazon's share price fell 2.5% in US trading on Wednesday to $10. A year ago, the stock was worth $77.

Jeff Bezos

Mr Bezos has suffered personally over this affair, if in no other way then at least financially.

According to Forbes Magazine's list of the world's richest people in technology, he is worth $5bn less than he was last time they looked.

Mr Bezos is down to his last $2.3bn, and consequently he is now ranked sixteenth rather than seventh on the list.

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Amazon chief's net stock warning
05 Mar 01 | Business
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