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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (61837)	6/10/1999 10:35:00 PM
From: Winston Lee	Read Replies (2) \| Respond to of 164684

Glenn, AMZN was a great purchase - you will not regret it. AMZN had latest quarterly revenue of $294 million, about 2100 employees, or $140,000 per employee. That's about $560,000 annualized. BKS had latest quarterly revenue of $718 million, about 15,200 employees or $47,237 per employee. That is $188,948 annualized. The comparable figures for mighty WMT and lowly KM are $158,461 and $123,016, respectively. In effect, AMZN is about 3x more efficient BKS, if wages and other variable costs were to be the same. To put it another way, AMZN and BKS would have similar productivity if AMZN employees were paid about 3x higher than that of BKS. The beauty of AMZN's business model is that despite this current advantage, efficiency will keep climbing because of exploding revenue, technological enhancements, and economics of scale. On the fixed cost side, BKS spent about $141 million (last 12 months) in additional plants and other fixed assets to drive a whopping 5% sales growth. Without additional new stores, its revenues might have declined. BKS has no choice to spend millions in order to produce revenue gains, however anemic. AMZN is spending millions for distribution centers, technology and other fixed assets. Unlike BKS, this will largely be a one-time charge, only until exploding revenues "catch up" with capacity, at which point it may invest in additional plant and equipment. The point is, AMZN's investment in plant and equipment is largely one-time event (think: free cash flow), unnecessary to drive future revenue growth only until full capacity is reached. Bezos cut prices on NY Times Best Seller books because he knows he's holding 3 aces: AMZN has brand name, market power and cost efficiency on both variable and fixed costs. Unlike YHOO which strove to be #1 in the portals, AMZN's motto appears to be, "We'll be #1 and there shall be no #2." Bezos is very smart - he knows this is a war which BKS cannot win and is going on the offensive - always attacking when he has the advantage. And with each passing day, AMZN's brand name and market power grow stronger. This is like a monster train plowing through all kinds of obstacles, Barron's or no Barron's. AMZN remains my #1 position and my #1 pick for the rest of the year. Regards,