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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 232.08

-0.2%

Dec 29 3:59 PM EST

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To: Eric Wells who wrote (80984)	10/17/1999 6:27:00 PM
From: Lizzie Tudor	Read Replies (1) of 164684

Eric, theres a ton of posts on this thread about cash flow... some pretty detailed ones too, with quotes from some of Meeker's reports if I recall... I wrote a few myself. You might want to do a text search and look them up if you are interested.... we've had this discussion so often before I think people hesitate to get into it again... however... :-) Cash flow was always the bullish analyst's argument for these high valuations. You have a feel for it and most of your post matches up with what they say. The difference is that you have marketing and infrastructure as reducing cash flow... infrastructure was viewed as a one-time buildout thing, this was the hyperinvestment period we are in now, but once those investments are made there is nominal infrastructure building going forward. So in real terms once you build-out amazon for the USA, setting up shop in the UK or Canada requires little investment relative to B&M. Marketing wasn't discussed by Meeker (and I don't think Blodgett either) that I recall, maybe because marketing costs are more or less identical for internet vs. B&M - the channel doesn't force different mktg (although the mgmt may decide to do more or less for a number of reasons). Internet companies have an edge in being able to use stock and non-recurring expenses to expand. Of course bricks & mortar companies could expand in the same manner - B&M expansion is a completely different animal vs. internet companies, I don't think we are on the same page here... B&N needs to pay a lot for plant and equipment for each new tiny mkt they serve... there is no way to back off in case of a recession or mkt error, etc. One area Meeker and Blodget didn't address is the issue of competition over the net and the ease of entry into a new market space. Its unclear whether the "gorilla game" arguments apply to competition here - I don't think anybody really knows. I have noticed though that all the me-too booksellers that people talked about earlier this year (buy.com, shopping.com, borders.com) have mostly disappeared and only bnbn is left with any relevance. Anyway this is an old discussion and I'm sure everyone is tired of it, I just thought I'd bring you up to date with the history...

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