DOOM, INCORPORATED.(Ravi Suria's dire predictions about Amazon.com fail to materialize)

In the summer of 2000, a Wall Street star was born. Ravi Suria, a young bond analyst at Lehman Brothers, issued a twenty-seven-page indictment of Amazon.com, depicting it as an inept company with poor credit and "the financial characteristics that have driven innumerable retailers to disaster throughout history." Without radical changes, he said, the company would run out of cash within a year.

The market's reaction was swift and severe. Although technically Suria's report dealt with Amazon's convertible bonds, not its stock, the company's share price fell nineteen per cent in a single day. Suria soon found himself anointed the new wise man of Wall Street, embraced by investors and the financial press. One columnist wrote that Suria's report was a "must-read" (hardly your typical reaction to the analysis of a convertible bond). "A needed wake-up call," said Business Week. "Giant killer," said Fortune. Before long, Suria had become the best-known bond analyst in America.

Suria was the man for a moribund market. By the time his report came out, the dot-com bubble had been pricked--Amazon's stock was already down sixty-three per cent from its high. Investors and the media were primed to believe the worst, and Suria gave it to them.In 1998, Henry Blodget, a relatively anonymous equity analyst, had issued his now infamous sky's-the-limit forecast on Amazon, and it made him a star. But by the summer of 2000 the sky wasn't the limit--it was falling, and Suria's grim predictions seemed spot on.

And Suria kept them coming. In October of 2000, he cautioned investors against Amazon's bonds. Then, in February, 2001, he argued that a steady decline in Amazon's working capital--that's current assets minus current liabilities--spelled serious trouble. By the second half of 2001, he predicted, Amazon could face a "creditor squeeze," meaning that the companies that supply it with goods might demand harsher payment terms, or even halt shipments. By year's end, he suggested, Amazon's cash hoard would dwindle to almost nothing, and the company would owe more than it could pay. The media swooned. "THIS GUY IS GOOD!" one headline read. By last spring, when Suria left Lehman to work for a hedge fund, nearly everyone, it seemed, was waiting for Amazon to die.

A funny thing happened, though, on Amazon's way to the grave: it got up and started dancing around the room. It has earned operating profits in the last two quarters. Three weeks ago, the company reported first-quarter numbers that far exceeded analysts' expectations (higher sales, lower expenses), prompting stories that brought back the heady days of 1998. ("Has Amazon.com become the ...