MB writes:
[summarizing Fred Hickey] He wails on Amazon again. Fred calculates that at the current loss and spending rate, and the inability to sell their crappy stock in the market, Amazon is belly up in 2 years. I think that is a bit too pessimistic as they will certainly cut spending if bankruptcy looms, which would also cut their loss. But things are not good at this bloated trading sardine.
But Mike there's that $1B bond issue hanging over Amazon's
head, with payments to be made beginning 2003, I believe. The
bond issue has "covenants" that likely require certain minimum
cash flow ratios, and probably require a certain minimum of cash
on hand (ie, Bezos doesn't get to empty the entire piggy bank).
Now, I don't know whatthe bond holders do if the going gets rough -
but they're the first in line, so when bad things happen to
Amazon.com, expect the bond-o's to take action (cutting expenses,
saving cash, selling assets, accepting preferred stock (dilluting the
current shareholders), whatever it takes). Then, again, if Amazon
runs true to form, they'll re-fi, and accept maybe a $3B loan (at
higher rates). If that comes to pass, it will pretty much kill
AMZN's "growth story", will be a big negative for the shareholders. |
