Amazon.com, Inc. (AMZN) Message Board

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

AMZN 230.27

-0.6%

3:59 PM EST

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To: Glenn D. Rudolph who wrote (111114)	10/24/2000 9:46:22 PM
From: Killswitch	Read Replies (1) of 164684

Here is the issue. There has been pressure on Amazon to prove they will not have a cash problem by next spring. One could also tell that by the focus of the conference call. Jennings I believe stated Amazon burned $4 million is cash. This looks accurate based on the cash and marketable securities at the end of Q3 compared to the end of Q2. However, a few items stick out at a glance. One is the $20 million that came from TOY in return for merchandise. Granted it is cash in the account but I surely would call that a one time cash inflow. You know how one time charges should be ignored. Secondly, $96.1 million of dollars in investments in investees was nicely journaled over to marketable securities which Amazon calls cash. Therefore, Amazon burned $4 million plus $20 million plus $96 million or a total of $120 million in Q3 if I did not leave anything else out. Would it not have been appropriate for Jenson to state we burned $120 million in cash but out cash position only decreased by $4 million due to one time cash inflows from these two items? This cash was not from operations and the $96 million was a bookeeping change. This is why I believe guidance of all types with this firm is suspect. I disagree first off on the toys inventory revenue. This apparently was merchandise they already had paid for, and most likely would have sold themselves (for possibly more revenue) if they had kept their toy section open and not done the deal with Toys R Us. So I argue that should be counted as part of their revenue. As for the bookkeeping change, I think you've got it wrong. Yes they moved some stocks from their "we are holding forever" mode to short term cash equivalent mode. $96 million worth. This does not mean however that we should immediately jump to the conclusion that they burned this cash. You can account for that missing $96m by adding together the following bits of information: their current inventory is now about $8.5m less than last quarter, the cash is shown as about $73m less than last quarter (they claim pro-forma loss was $68m in cash burned), and their pre-paid expenses are up this quarter by around $13m. What I am saying is that I believe they burned probably in the range of $70 to $75m in cash this quarter unless I am missing something. Any other decline in their total amount of assets is probably due to reduced value of the stocks they hold since last quarter. I think you are blowing this whole $4m thing way out of proportion. They probably said that in the call to emphasize as you said that they have plenty of cash, but all you have to do is look at the top of the press release where they clearly spell out that they lost at least $68m for the quarter. They aren't disputing that.

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