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

To: i-node who wrote (89415)	1/2/2000 1:50:00 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 164684

Thanks for your feedback David. We have a few people here (myself included) that understand Amazon on a detailed level in some capacity, but the accounting stuff remains a mystery and there is a lot of accusations about what they will or can/cannot do. For example will amazon show profitability in CDs and books at the expense of the other lines... lying with statistics so to speak, I know some people here think that. A huge issue for me with amzn is what will they do with all these investments. I have visited 3 dot coms in SF in the last month, all of which are leading in their category or at minimum one of the top two players. And every one has amazon as an investor. Will amzn function as a dot com incubator or bring these other companies into the fold? That is a big question. With the amzn customer database they have leverage with their investments that no other investor really has.

To: i-node who wrote (89415)	1/2/2000 9:15:00 PM
From: Eric Wells	Respond to of 164684

David - thanks for your post. In reply to some of your comments You seem to be arguing that the business model won't work -- that somehow, WMT is able to make money in B&M while AMZN will never make money in a .com. This simply doesn't make sense; I wasn't arguing that Amazon won't make money. the main point of my post was that there is a high degree of uncertainty in Amazon's business model. I believe that many investors and analysts assume that since Wal-Mart was very successful with the superstore concept in the bricks & mortar world, that Amazon will see the same level of success with a superstore on the internet - but in truth, we don't know. Wal-Mart essentially had the benefit of economies of scale - by bringing many retail categories under one roof and implementing an advanced distribution system - they made it easy and attractive for customers in rural areas to shop for many items in one place. These same economies may not apply to the internet - and in fact, one could argue quite convincingly that they do not apply. Well, assuming arguendo that non-fulfillment marketing costs are zero, then yes, you could say that they have lost money on every unit they've sold. In truth, we don't know if Amazon has a positive profit margin on anything at the moment - and in fact, the executives at Amazon don't know (they certainly would have made such information public). And in subtracting out expenses for calculating profit margin, I'm not talking about long term investments in warehouse space, etc. - I'm talking about all the expense involved in taking an order for, packaging and shipping an item. This is what needs to be evaluated to determine if Amazon's model works - yet, we don't have the data to accurately make such an evaluation - because Amazon lists different expenses involved in the calculation in different places on their income statement. Bottom line is that you've got a guy, Bezos, who is starting an operation designed from the ground up to scale to many billions in sales. Again, my main point is that there is a lot of risk and uncertainty in Amazon. To invest in Amazon is to put your faith in Bezos. Unfortunately, Bezos has not done much to secure my faith in his company and in his ability to succeed - if anything, his brash approach has caused many investors (myself included) worry. I'm not sure that your drug company analogy is a good one - as drug research & development is a completely different business. Wal-Mart might be a more appropriate analogy - and I believe that Wal-Mart was profitable before going public and has been profitable every year since. All we know of Amazon at the moment is that their sales continue to increase - as do their losses - and while Amazon was scheduled to be profitable in 1999, no one knows when they will be profitable now. We also know that insiders at Amazon have sold around $600 million (perhaps more) in stock since the company went public - $500 million in the last year alone. When I see vice presidents at any company dumping stock at the rate Amazon VPs are, I tend to question the company's business prospects - if these executives are selling, why should I as an investor buy and hold (I don't buy the diversification argument - so don't feel the need to make it - I've watched too many other companies where executives hold for the long term). Again, thanks for your comments - and good luck to you with your investment in AMZN. -Eric