Bill Wexler's Profits of DOOM Message Board

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Strategies & Market Trends : Bill Wexler's Profits of DOOM

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To: Jay8088 who wrote (2928)	9/22/1998 12:38:00 AM
From: Mad2	Read Replies (1) of 4634

Jay, without a doubt and particularly without a clear track record YHOO is expensive. Relatively speaking I belive AMZN is more overvalued than YHOO and frankly I don't think AMZN is going to grow margin see the breif comparison below: Item YHOO AMZN Price/Book 61 107 Price/Sales 72 13 Emply's 386 614 Cash 143 340 Debit 0 332 6 mo revenue 71.4 203 income B4 spec charges 12.4 (25.1) special charges 44 5.4 operating margin ~95% ~24% depreciation 1% 5% Market Cap 9bil 4.2bil I belive AMZN's problem will be to grow margin. As they have grown the cost of sales as a percentage has stayed about the same. This 19% margin after depreciation is nothing to write home about. AMZN is the catalogue business without the catalogue, lowering the barrier to entry. Given that they will see competition from BK where are they going to go? If they focus on the "web catalogue bus." they better start focusing on cost now, as cost and efficiency will determine who cuts it down the road. However that won't be enough to keep the shareholders happy. If they acquire or reinvent themselves to provide additional services they risk alienating their channels to customers if they move to compete with the YHOO, AOL etc. Who knows what AMZN will be long term, right now they are a bookstore that has lackluster margins and poor profit potential. YHOO has great margins, a lot of users, and again the potential to accelerate earnings. Don't misunderstnd, I'm not buying this thing. The point is AMZN IMO is a "safer short" of the two. Anyway goode luck.

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