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

To: Alomex who wrote (108134)	9/8/2000 9:50:24 PM
From: Alomex	Read Replies (1) \| Respond to of 164684

Now, most analysts peg AMZN losses at $0.25 per share, for a total of $90 million for the Q4 2000. This means that even on seasonally high sales of $1000-1200 million analysts do not see this company making a buck. Lets be generous with this dog and assume net revenues on last dollar sold of 20%. This means that Amazon needs to post sales of $1500 million before it operates regularly at a profit. At the current rate of growth Amazon is three years away from posting such numbers in an out-of-season quarter.

To: Alomex who wrote (108134)	9/8/2000 10:18:09 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

Thanks. From your message, in table format, Thank you for the table format. That was easier to understand:-) Therefore we can assume AMZN will report the revenue in the way that maximizes its impact on the top-line (for example book the sale at full price, and then have a negative charge in the "customer promotions" line to account for the on-line discount :-). Not anymore. The filing today restated the last three years income and balance statements. Revenue was reduced by the amount of the gift certificate in an "attempt" to comply with GAAP accounting. I am only guessing but suspect Amazon knew that the SEC was going to force a restatement. They did not however move the fullillment expenses into the cost of goods sold although mentioned they may be required to do that. There was a "new game" regarding fullifllment expenses. The cost of leasing the distribution centers was moved to a capital expenditure and therefore it does not show as an expense for fullfillment. Labor, packaging material, etc. are included in fullfillment. Amazon did give numbers for these expenses so my guess is if they are required to re-state again, they will want the costs of the centers (which they do not own) to be amortized and not be in fulfillment costs and thus removing them from cost of goods sold. I sure am doing a lot of run-on sentences this evening<G> The current numbers used for fulfillment expenses would bring the cost of goods sold up high enough to leave a gross margin of about 10%. If one was to add the leasing of the distribution centers to the cost of goods sold, there would be no gross margin at all. It is my belief that the lease expense for the distribution centers should be in the cost of goods sold since Amazon is not buying these centers with their lease payments. Also, Amazon could not do fullfillment without the centers. There are six locations within the US in which Amazon handles customer support, administration, etc. I agree these expenses to be long in administration. My point is the re-statement provided enough cost breakdown to make a determination that there is really no gross profit with true GAAP is used. The losses Amazon is incurring are due to the marketing, administrative, content, servers, customer service and the various other expenses that are required in the retailing business. Will the market react negatively if Amazon has to re-state showing no gross margins thus far?