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

AMZN 226.10

+2.5%

Nov 24 3:59 PM EST

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To: Bill Harmond who wrote (44311)	3/6/1999 8:31:00 PM
From: Sarmad Y. Hermiz	Read Replies (1) of 164684

>> If they built all those stores and associated infrastructure and just had their music and book sections installed so far, they certainly would be losing money. << I don't know how WalMart did it, but they ended the year with $5B earnings after tax. The key is their gross margins were 30%. And apparently their utilization of their capital and labor is much better than Amazon. By the way, it is incorrect to say Amazons's losses are from "investments". The IRS will not let you deduct "investments" from your income. If you have a retail store, and you put all your profits into infrastructure, shelves, inventory, computer systems, trucks, whatever, you cannot deduct all these items and declare a loss. You can amortize them over their lifetime and deduct some each year. So Amazon's losses are real losses from operations. They are not an accounting choice to avoid taxes.

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