Moody's ups Amazon.com

Moody's Investors Service said it upgraded the long-term debt ratings of Amazon.com and assigned a positive outlook due to company's consistent improvement in operating margins, reduction in funded debt levels, and strengthening operating cash flow.

Moody's now rates the company's senior implied rating B1, issuer rating B2, various convertible subordinated note issues maturing 2009 thru 2010 at B3. Moody's also affirmed the speculative grade liquidity rating at SGL-2.

The long-term ratings reflect the company's solid liquidity reflected in its SGL-2 rating, strengthening operating cash flow, reduction in funded debt levels, and its dominant position in online retailing. In addition, the ratings also reflect the value of the Amazon.com franchise and the long-term nature of its capital structure with the nearest term debt maturity being in 2009, Moody's said.

The ratings are constrained, the agency added, by the uncertainty presented by Amazon.com's evolving business strategy, and the company's ability to balance its rapid growth and low cost environment with ensuring the appropriate business policies and controls are in place, as well as the possible impact on financial policy and controls of the lack of finance or accounting related experience on the audit committee.

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