It's a silly report that's chock full of errors

Amazon

But the online shop has rejected as "silly" the investment bank's assertion that it faces a possible credit squeeze.

"Without additional capital infusion, the working capital level is expected to dip into negative territory during 2001," according to a report by Lehman analyst Ravi Suria.

"The low levels of working capital could trigger a creditor squeeze in the second half of the year," he said.

Amazon's denial

"Obviously you can't take this seriously," said Amazon spokesman Bill Curry.

"It's a silly report that's chock full of errors.

"He said we would be out of cash by the end of 2000 and he missed by $1.1bn," Mr Curry said, referring to a previous prediction by Mr Suria.

Mr Suria has suggested investors stay clear of Amazon's convertible bonds since last summer.

Lehman's analysis

According to the Lehman report, Amazon was down to its last $386m by the end of 2000, well below the company's own reported liquidity reserves of $1.1bn.

Convertible bonds defined

Bonds that can be converted into a predetermined amount of the company's equity at certain times during their life. Convertible bonds tend to offer a lower rate of return in exchange for the option to trade the bond into stock, if the stock price does well.

And unless the online shop attracts fresh cash, its readily available cash reserves will fall $38m into the red, the investment bank predicted.

Shares in Amazon fell half a cent on Tuesday, trading on the Nasdaq hi-tech exchange at just under $14.

The share price is now back to levels not seen since late 1998.

Amazon's share price has fallen dramatically in the last year, from about $84 last January.

At its peak in late 1999, the stock traded at almost $110 per share.