Amazon.com, Inc. (AMZN) Message Board

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

AMZN 244.25

-2.0%

3:59 PM EST

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To: Ken Pomaranski who wrote (2075)	3/9/1998 11:20:00 PM
From: Ken Pomaranski	Read Replies (2) of 164684

A little tidbit: (from last quarter) AMZN nets 20% of sales. (20% Gross Margins) 3% sales = general / administrative expenses 7% sales = product development. 25%(!!) sales = advertising. Basically, the company is fairly profitable if advertising is cut. Also, the bears who claim AMZN can't make money selling books are blowing smoke. Now, one could argue that advertising is basically a fixed cost, and will decrease (as a percentage) as revenues explode. Also, one could argue that once AMZN has total hold of the internet, they can back off on advertising. I'll tell you one thing, when AMZN generates 1.2 billion in revenues, they will not be spending 270 million in advertising! This rivals the 'big, big boys'. I started working some numbers on excel. very interesting... I'll post more details once I double check some of the numbers against other retail companies... kp

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