mark
i don't know man - this seems pretty clear to me
Can Amazon.com achieve a nearly 60% average annual revenue
growth rate over 10 years? That's where investors must turn to industry
fundamentals and old-fashioned common sense. For instance, using
Wolf's calculations, Amazon should reach sales of $63 billion in 10
years. Is that realistic?
Not by a long shot. U.S. retail book sales in 1997 were $11.8 billion,
and they're not expected to be much higher in 1998. Even if the book
market expanded at 3% a year, it would be only around $16 billion 10
years out. True, Amazon is selling recorded music, but that market is no
larger than books, with growth prospects no better. ''Amazon has to sell
a lot more than books, CDs, and videos if it's ever going to reach the
revenue growth implied in the price,'' says Wolf. True, that's in the
company's plans. But as it changes from a bookstore to a mass
marketer, it will run up against competitors. Says Wolf: ''Barriers to
entry are low, and others can easily underprice them.''
even assume a combined $30 billion book, cd, and music market (too high and implying a spectacular growth rate)-- that's the WHOLE market. Next assume that bezos under-estimates the % sales that will happen over the web by factor of 5 (he recently quoted a 10% estimate) but let's you and i use 50% -- fair?
ok 15 billion in web sales. Next, what % of the market do you want to give amazon (remember we're going out 5 year) --- assume borders, bks, walmart, costco, tower, cdnow-ntki, bmg, columbia house reel.com have gone bankrupt -- i give amzn everything all $15 billion.
now where is the other $45 billion coming from? overcharging on palmpilots? pc? flowers? cars? travel?
You can get all those today with choice at any portal.
lp
ps no idea where this stock goes ... long term, i'm sure, short term no clue. |
