The fact, not a "pissing contest", is that Amazon.com is NOW valued at many times what analysts forecast for earnings in the year 2000. Is it that the company's own disclosure statements clearly point out that the GROSS MARGIN on 10 times the current level of annual sales need to be achieved just to pay off the Senior notes? How much sales will it actually take to pay back the venture insiders is anyone's guess since the company now earns a negative 10.1+% net <profit>. What if the company is able to achieve net profit of 10% in a just three years? How many years will it take to pay off the $540 million? Let's see, $540 mil/0.10 = $5.4 billion in sales. If Amazonianut.com grows sales to ten times the current level, then it will take more than two years of total profits just to pay off the debt. Not a pretty number unless you are the venture capitalist. And this debt is only expected to carry the company through the next twelve months. OK, to be fair, the Senior notes can be paid off sooner if the company is able to, thus potentially reducing the $540 amount to between $450 to $540 million. But What will the company use to expand to a distributed warehouse infra-structure and larger inventory levels? What will they use to fund the cash-flow requirements on products that do not provide the 45 days credit terms that books do? Have you ever studied a pro-forma cash-flow statement? Run the model up on your Excel spreadsheet and see how it looks. I'd love to see the results. Amazon.com will need to go out for a secondary offering or more expensive debt by twelve months in order to fund the need for increased facilities, inventory, and cash-flow expansion. $Caching$, there goes the hope of investors ever seeing earnings for the next several years.
If youre willing to concede that speculation on future earnings or losses is not a valid way to judge the value of Amazonianut.com shares, then what do you propose to value Amazon on? Current earnings (excuse me, losses)? I think you only want to look at the things that are exciting - high internet growth rates, and ignore completely the fundamentals and pay-offs on the huge debt.
I invite you to post any facts and figures that justify the price based on current fundamentals or projections. Step over your "bullshit" line in the sand if you dare, or sulk away if you can't. |
