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Father Christmas has yet to be converted

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A disappointing preliminary report on the Christmas haul for online retailers Monday caused jittery investors to dump shares of several Web-oriented companies.

Numerous Web stocks were down by as much as ten percent in early trading. EToys continued its backslide, dropping by five to close at 25.94 after analysts downgraded it from "buy" to "long-term attractive". Yahoo fell by 22 and Amazon by about nine, though Yahoo later gained 12.38 to close at 415, for a loss of just over 19. Amazon closed down 8.88, at 81.12. In spite of it all, the Nasdaq closed up slightly at day's end, confirming that online retailers were indeed the tech stocks hardest hit.

In spite of heroic efforts by President Clinton to promote online Christmas shopping, the period between Thanksgiving and Christmas showed lukewarm e-tail performance. The problems were the same as always: in-time delivery records remained poor, customer satisfaction was less than hoped, and profits are again expected to be laughable when the Q4 reports come out next month.

And now, with the much-hyped Christmas money-burn over, there is nothing in the offing to revive the industry, except perhaps an explosion of online seekers of post-season sales. That may help, but it won't generate the kind of bump in revenues which the e-tail industry has been offering investors as a substitute for profits since day one.

Meanwhile, American consumer confidence soared to its highest point in thirty years according to a survey released yesterday, which is another bit of bad news for the e-tail industry. Americans couldn't be more eager than they are now to spend their dollars on consumer products. And if they won't shop online in large numbers now, with a booming economy and the lowest rate of unemployment in decades, it's hard to imagine when they will. ®

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