Amazon.com's Uncertain Future

NEW YORK: Amazon.com has done it again. The top online bookseller surprised Wall Street late Wednesday by announcing that it was now the top online music store as well. Total sales have quadrupled to $153.7 million, from $37.9 million in the third quarter. But FORTUNE writer Nelson Schwartz is still nervous about the stock -- mainly because the Seattle-based company's quarterly losses also quadrupled, to $45.2 million, and the online commerce business promises to get only more competitive as it matures.

"Long-term profitability is still a big question mark," says Schwartz. "Amazon.com has a good brand name, but they don't have a proprietary product, a gimmick that its competition doesn't have. And the profit margin on this kind of business is only going to get slimmer and slimmer." Amazon.com is hardly doomed to fail -- in fact it's clearly the strongest in its field. But as that field gets more saturated, the company's stratospheric stock price -- at 124 and counting -- is going to get harder and harder to justify.