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Strategies & Market Trends : Good Investment Theses: VALUATIONS w/ FUNDAMENTAL ANALYSIS -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (156)	7/19/1999 3:05:00 PM
From: ratan lal	Respond to of 160

You are right about not using the book value (breakup value). discounted value of future free cash flow is valid in that it shows the financial strength and viability of a co. In other words as long as its cash in is greater than cash out and the sales is growing then the co. is utilizing its cash properly. AMZN may have had negative cash flow. But thats where they came up with their convertible bonds to get more low interest cash which (hopefully) improved their cash flow. And when the stock price shot up maybe (i dont have the info) some stockholders converted to stock thereby reducing even their low interest debt. I dont believ in eye-ball valuation either since I have personal experience that I rarely if ever look at the banners. But thats how all newspapers, magazines, TV advertisers pay for their ads. SO it does have value. My understanding is that advertisers a re charged for each click and a premium for click-thru. Would love to see your valautions of cos. with earnings. More impaortantly, reasons why you consider your criteria superior. thanks

To: Chuzzlewit who wrote (156)	7/19/1999 6:00:00 PM
From: The Philosopher	Read Replies (1) \| Respond to of 160

Amazon.com is able to maintain close to a zero operating cash flow only by virtue of the fact that sales are growing and that there is a major timing difference between cash in from customers (sales are all on a cash basis), and the cash it pays out to suppliers (which is typically around 60 days). So, in a very real sense it looks like a Ponzi scheme, where accounts payable due suppliers and the sale of stock (to employees via stock options) are keeping the company afloat. I had noted that, too, when I went to look carefully at AMZN. But I didn't liken it to a Ponzi scheme. But maybe that's really what it is! What does happen if AMZN hits a low month for sales? Hmmmmm...