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

AMZN 220.66

+1.6%

Nov 21 9:30 AM EST

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To: Glenn D. Rudolph who wrote (10040)	7/11/1998 11:39:00 PM
From: Rob S.	Read Replies (1) of 164684

High growth rates and revenues are not all that is important. Margins and viability of the cash-flow model need to be taken into account. Almost anyone can sell stuff bellow the cost of bringing it to market. The internet offers both a fantastic automation of communication and delivery of services and products but also a lessoning of the barriers to product sourcing and competition the likes of which the world has never seen. Amazon.com has a high-profile, high rent district, rich yupie business model that is oriented toward the growth side of the internet paradigm to the detriment of even comprehending the margin contraction side of the equation. They are showing increased losses with no prospects for profit for the next couple of years. Meanwhile, both richer and leaner & meaner competitors are adopting the same open strategies and tighter business practices to offer products at price levels that will leave Amazon.com bankrupt or at best a marginally profitable company at the time investors hope they will be seeing gravy. The Amazon bulls offer few concrete arguments as to how Amazon will ever realize the huge profits that would justify the current, let alone some higher price. I challenge anyone to offer a roadmap to Amazon's profits with even the barest of details that can be intelligently debated. Amazon now has gross margins of 22.4% which the company admits will go down as competition broadens. They offer books and tapes/CDs at a mere 20% off, no more than walk-in retail establishments while several competitors routinely offer 30%-50% discounts. Were is the gravy going to come from?

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