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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 233.22+1.8%Nov 28 9:30 AM EST
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To: Mark Fowler who wrote (6975)6/21/1998 8:50:00 PM
From: Glenn D. Rudolph  Read Replies (1) of 164684
 
Glenn only four qtrs. of steady earnings. Amazon.com's bricks-and-mortar competitors
may be able to show earnings right now but can they underprice Amzn in the short run.
That would put their land-locked businesses in trouble, since the bricks and mortar part
isn't a cash cow that can feed the cutthroat Internet price leader indefinitely.


Mark,

The brick and mortar operating is now a cash cow. Expansion is not necessary. BKS can finance their online operation from the traditional business without incurring debt. AMZN cannot.

I'd be much more interested to see if they can get their asset turnover up close to
Amzn's. Because asset turnover is due to operating acumen, Amzn's asset turnover is
16.5 to Bks of 3.28. Asset turnover is many times more important than operating
margins and earnings in this current environment. Walmart kick the hell out of k mart
on this point.

The asset turnover issue is way overblown. AMZN has a high turnover because they inventory very little. They use jobbers to supply the inventory. The jobbers charge a premium for that service. Therefore, AMZN will never be able to match the gross margins of BKS or BGP. BKS can increase turnover by reducing inventory but that will reduce profits. The bull AMZN argument is self defeating on this issue.

Glenn
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