Roger's 1998 Short Picks Message Board

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Strategies & Market Trends : Roger's 1998 Short Picks

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To: GLENN TRIEFF who wrote (768)	1/15/1998 9:58:00 PM
From: Oeconomicus	Read Replies (1) of 18691

inexpensive ...to sell books ...Overhead will be minimal... Economies of scale ... Glenn, I think you are reading AMZN wrong. Most of their costs are variable (cost of sales, marketing) with limited scale economies. Gross margins would be better if they ever get to the sales volume to get the discounts BKS and BGP get from publishers, but their marketing costs are going to continue to climb, especially with competition. Then there's the question of whether there really is the potential to sell that many books over the Web in total and for AMZN to grab enough share to do $1bn themselves two years from now. Can they, from a Web site, really be 1/3 the size of BKS with its 1000 or so outlets (plus a Web site)? I don't think so. Why would you pay now a ridiculous multiple on FY2000 earnings estimates that are based on pie-in-the-sky expectations? Besides, they WILL do a secondary this year. Read the terms of the new loan agreement and you will see why. sec.gov Regards, Bob

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