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

AMZN 229.12

-0.2%

Nov 26 3:59 PM EST

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To: Sarmad Y. Hermiz who wrote (44317)	3/7/1999 9:58:00 AM
From: Glenn D. Rudolph	Read Replies (1) of 164684

>>I hope you're not basing your investment decisions on semantics. You can deduct expenses from your income. Advertising and promotion are expense items. Looks like the tax laws treat Amazon favorably compared to capital-intensive chain retailing. << The tax lawa are identical for Amazon and any other retailer. Losses are losses and profits are profits. If a retailer shows a profit but invests that profit into their company's infrastrure, they pax tax on that profit. The would be true with Amazon too but you do not see that because Amazaon has never seen a profit. Amazon is not losing money due to expanding their business. Amazon is losing money due to the simple concept they are selling products at a smaller gross margin than their expenses to obtain those products plus their costs of operations. This would be true even if they did not advertise. Look at the 10-K. Is shareholder equity from 98Q3 to 98Q4 increased or reduced ? These are not semantic losses. They are real, and there is no end in sight for the losses. At least according to company statements. This is worse than it appears also. The remaining shareholder equity is only goodwill and AMZN will tout that as they show the whopping 88 center per share ont their books. On the other hand, each quarter when numbers are released, Amazon and the analysts focus on "performa" numbers not the additional losses due to the amortization of the goodwill. Amazon and the analysts should be consistant. Either we ignore the goodwill (which they do for earnings stating for informational purposes only) and ignore goodwill in the bookvalue per share or we include goodwill in both numbers. Glenn

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