I can't stop myself<VBG> Bill Miller must own a lot of AMZN and is way underwater:
Bill Miller
Internet sector was very strong the last two days but Amazon did not participate?
Suria took Amazon.com's first quarter numbers and extrapolated them going forward. The
problem is that this skews the numbers downward because the first quarter is the company's
weakest part of its fiscal year for generating cash.
Amazon burned far more cash in Q4 99 than Q1 2000 when one takes into account the accounts payable due within 30 days. They burned more cash in Q1 200 than Q4 99 without the payables I believe.
The convertible debt situation is a concern, to be sure, but a company of Amazon.com's
caliber should be able to strike a partnership or find new lenders if needed.
Really? I know it would not be a bank. Amazon has no tangible assets and will not even have any intangible assets that will show in the report for last quarter. The junk bonds are in the dumps so why would people want to buy more bonds?
Running out of money? Amazon.com had over $1 billion in cash at the end of March. And last
month, CEO Jeffrey Bezos said the company expects to fund operations from cash flow by
the end of the year.
Bezos stated a few years ago Amazon would be profitable by now. "Expects" is meaningless. I beleive Bezos has lost credibility in the eyes of the street. Amazon had $1 billion dollars but only $750 million after accounts payable were paid. Amazon burned $1 billion in fiscal 1999. The burn rate has not yet slowed from reports we have seen.
Building a loyal army of 20 million customers and garnering a reputation for remarkable
customer service is an achievement.
Amazon even admits that only 15 million customers are active. Apparently, the they are not that loyal.
Lehman's Suria wrote that Amazon.com, this winter, would face ``arguably the most
challenging holiday season.'' I don't think so. Last year was Amazon.com's most trying season
when all those semi-anonymous e-tailers flooded the airwaves with annoying ads. Now that
many of those companies have thankfully gone out of business or merged, Amazon.com
stands to inherit their customers. Amazon.com's competitive position has never been better.
This will be the year of the traditional retailers making a huge splash on-line. Brands already well known.
In fact, in Amazon.com's fourth quarter last year, repeat customers accounted for 73% of all
sales. How do you value an intangible like loyalty?
This points out how customer acqusition is slowing to the point that attrition may be equal to aqusition soon.
Amazon.com holds equity stakes (whose value has dropped significantly this year) in a
number of Internet companies. Amazon.com owns portions of Nextcard (NASDAQ: NXCD -
news), Pets.com (NASDAQ: IPET - news) and Kozmo.com, among other companies.
These all are losing money.
<i.Amazon.com also has a 22% investment in HomeGrocer.com (NASDAQ: HOMG - news), which
was recently bought by Webvan (NASDAQ: WBVN - news) . Amazon.com's interest will be
converted into a 6% to 7% stake after the merger is completed. The HomeGrocer.com
acquisition is great for Amazon.com.
I thought their stake in Kozmo was to handle this. Does this mean people may want instant gratification and not wish to wait for their products to be delivered? Will people flock to the local brick and mortar store so they may bring the item home?
Still not bullish on Amazon.com? Consider these facts:
Biggest physical distribution system on the Internet.
Yes long term fixed expenses that will prevent profits for years to come.
Core business of U.S. books, music and videos is profitable.
Not a chance in my opinion. Please show me the money.
Competitive prices and unparalleled customer service. Amazon.com said that more than 99%
of its holiday orders were shipped on time last year.
So how much money did Amazon lose doing this?
Biggest e-commerce player in the world.
Also has the highest e-commerce losses in the world.
I am done! |
