Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Lizzie Tudor who wrote (89427)	1/2/2000 2:56:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

I think what I said was that fulfillment was included as a cost of sales at the direct PC manufacturers, therefore why would Amazon do it any different? Liz, That sounds correct and I am sure that is what you said. Amazon does not place fulfillment in cost of sales as do most mail order firms. I believe your statement about most ail order firms is correct. Amazon does something I have not recall having seen in the past. Fulfillment expense is in marketing rather than operations or cost of sales. The marketing expense line is almost all inclusive of every expense except cost of sales. For example, the utilities, property taxes, wharehouse leases, payroll, toilet paper for that matter are all in the marketing expense. David is correct that this type of accounting is permissable but I suspect it is very innovative accounting so to speak. I am always guessing how did the boxes ll that stuff was shipped in really cost? How much was non managerial labor? I can't say I have a clue so I project that fulfillment is exceeding gross margins at this point in time. David believes differently and he may have a better feel for this. The other issue as David mentioned is the fixed expenses for unused capacity. His opinion and mine differ a little (I would not say a lot) on how much is variable. I am truly of the opinion that when the numbers from Amazon are released in January, they will state books and CDs were profitable. I can't confirm this nor prove it incorrect in that there is inadequate information outside the company to make that determination. I suspect Amazon has had enough experience with the cost of fulfillment that they can make a reasonable determination as to what costs go with what products. It sure would be good for the stock if they make the statement books and CDs were profitable. I doubt we really are going to know this is true. As much as I do not like the firm, I am not calling them a liar on the number in the event that is what they report. I really do not know. Glenn