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

To: Glenn D. Rudolph who wrote (96788)	3/18/2000 2:13:00 PM
From: H James Morris	Read Replies (1) \| Respond to of 164684

Glenn, this is an excerpt from Fortune, and obviously you've been telling us for years. I want to tell you as a investor/owner of .coms I find this whole article disgusting. Its the worst thing I've read since the Eeln IPO fiasco. If this article is taken seriously it could really shake up the .coms for good, which would not be good for me. Btw Some pretty negative stuff about Vert too. >Amazon.com, eToys, and 1-800-flowers are among the many e-commerce companies playing a shell game with "fulfillment costs," which are the expenses associated with warehousing, packaging, and shipping products. Offline companies usually record the expense on their income statements as cost of sales. But not dot-coms. A lot of them classify fulfillment costs as a "marketing expense." Why? Because cost of sales cuts directly into a company's gross profit margin. Many e-commerce companies already operate with extremely narrow margins and have little interest in seeing them trimmed further. The other benefit: The practice enables dot-coms to hide operational expenses amid the huge marketing costs that investors believe are a temporary splurge associated with establishing brand recognition. If investors realized that these "marketing" numbers concealed large portions of the business' permanent cost structure, they might change their opinion about the company's prospects. Textbook e-tailer Varsitybooks.com went so far as to dismiss auditor KPMG in October when it objected to lumping fulfillment costs under marketing expenses. The company's new auditor, PricewaterhouseCoopers, approved the practice.