Amazon.com, Inc. (AMZN) Message Board

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

AMZN 229.12

-0.2%

Nov 26 3:59 PM EST

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To: GraceZ who wrote (151025)	12/27/2002 12:42:56 PM
From: Alomex	Read Replies (2) of 164684

I'm trying to figure out what people think will happen when this company declares itself cash flow positive. Grace, part of the problem is we've been over this a hundred times. Consensus is that Amazon will turn profitable (on a yearly basis) soon (within the next year or so), so nothing will happen in the short term. In the six to twelve month range two things will become clear: (1) long term margins in the growth-stalled book side (2) potential market size in the high-margin partner side of business. Z-shops was a flop, but the Toys-R-Us seems to have been very successful and profitable. IMHO the answer to (1) is 3-5% and for (2) is $400-500 million a year. Doing the math we get real (as opposed to pro-forma) long term profit estimates of somewhere around $200-300 million a year. This gives a five* year forward P/E of 24-36. You'll be hard pressed to find another company trading at such high P/E ratio. (*) IMHO pro-forma figures are not worth the paper they are written on. They are too easy to fudge (legally). Even profits are somewhat fudgeable. Net cash flow, accounting for liabilities, is IMHO a much better measure.

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