Amazon.com, Inc. (AMZN) Message Board

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

AMZN 232.37

-0.9%

Dec 3 3:59 PM EST

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To: H James Morris who wrote (133418)	10/24/2001 3:28:15 PM
From: Glenn D. Rudolph	Read Replies (1) of 164684

Glenn, OFF TOPIC because this is about Amazon.com. I too took an hour out of my life and listened to the conference call. What did you think of the analyst's questions? The only reason I ask is because I still own the convertible bonds. There were not any decent questions in my mind. This also made for a non information call. The analyst after Noto was questioning the margins on the sale of used items. I cannot recall the analyst's name. Jenson stated the margins on used items was the same as new items. The analyst was a bit skeptical but he or she did not persue this enough. It is clear to me that a greater percentage of revenue is coming from used product sales. My personal analysis is the margins on the used merchandise sales is less than the margins on new merchandise sales. Amazon management even refused to break down how much revenue was from new versus used. Revenue was essentially flat but gross margins were down 400 basis points give or take. This last quarter Amazon had the highest percentage of revenue from their service side meaning handling the sites for Boarders, Circuit City, etc. Amazon claimed a gross margin of 58% for this segment. Also 7% of their revenue was from this segment so everything being equal gross margins percent should have increased. I suspect the decrease in gross margin was due to the lower margins on used goods sales and there was enough of this lower margin revenue (25%) to off set the increased margins from service and higher pricing on new goods. Note most of the low margin business is farmed out such as electronics. My point is in my opinion, management is lying about the gross margins selling used product. The drop in new product sales was huge due to the sequential decrease in revenue and the major increase in used product sales plus service revenue. I am still of the belief Amazon cannot make it through Q1 2002 unless the equity markets infuse cash. Working capital was a touch under $200 million and Amazon received $100 million from AOL just last quarter. There is also something wrong with thier inventory number. This has been going on for a while. I the class action lawsuit against Amazon indicating that Amazon had set merchandise aside that ther were going to return has merit and that Amazon has no return agreement. They lawyers for he Plaintiffs have ex-Amazon employees or I believe they have ex-employees willing to testify they were told to seperate this inventory. This will likely never see a court room so we will not know.

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