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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 229.10-1.4%3:59 PM EST
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To: Bill Harmond who wrote (144952)8/7/2002 12:50:15 PM
From: Glenn D. Rudolph  Read Replies (1) of 164684
 
"Accounting losses. They made money.
You throw around these "losses" like they're burning cash. They're not. They made money last quarter. "

Bill,

I know why you have as much difficulty in the market as you do. Accounting is the method used to determine if a company makes or loses money. For example, I have to turn over GAAP numbers to the IRS for my taxes. My accountant and auditing firm is not like Author Anderson. The numbers have to be correct or they will not sign off on my statements. My bank requires financial statements to determine if they will lend me money. Candidly, they are not really interest in my opinion as to how we are doing.

Amazon really lost $94 million last quarter and that is if we are comfortable with the numbers they provided. As far as cash flow is concerned, please compare the inventory at the end of Q2 compared to the end of Q1. I am not terribly comfortable with the inventory numbers due to my experience on how inventory may be legally evaluated for retailers. Let's say the inventory number came in at $1,472,000.00 higher because well certain items were not totally non saleable or something like a few TV sets (100) were missed in a corner. Proforma would then show the operations excluding all the expenses Amazon excludes as exactly break-even. Some people may fined that to be a strange coincidence. It is difficult to have revenue in one quarter close to a billion dollars and not make or lose a dime. I suspect the number for inventory was thrown around a lot prior to settling on one. The question management likely was trying to determine is would it be better if we show a slight profit or loss this quarter? It is difficult to show much improvement from an already small Proforma profit so comparisons would be easier against a loss. Look everyone was looking for a loss anyhow and the loss is smaller than was expected using the inventory number that was used. Finally, the higher we bring that inventory number compared to reality, the more difficult it is to bring it up much more next quarter.

Finally, you are aware last quarter results are unaudited? Who do you believe made the final decision on the inventory number? Jeff Bezos or maybe Jeff Peke? I am going to guess Jeff had the final say.
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