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

To: Alomex who wrote (108139)	9/8/2000 10:06:25 PM
From: Alomex	Respond to of 164684

Please note that for the sake of the argument I used analysts figures for projecting AMZN revenues into the future. In the past analysts have proven overly optimistic.

To: Alomex who wrote (108139)	9/8/2000 10:51:31 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

Sales for quarter ending 9/00 are estimated by analysts around $600 million, with losses of approx $115 million. On sales of $1000 million, analysts estimate losses of $80-90 million. That is, on extra sales of $400 million, analysts see Amazon paring its losses by $25-30 million for net margins for last dollar sold around 10%. Using these figures, to remove the last $80-90 million in losses Amazon would have to post sales of $1800-$2100 million. Also we can assume that Amazon will stop expanding as fast as it used therefore in Q4/2001 we should expect AMZN to break even or nearly so. The subsequent three quarters AMZN would continue losing money and finally post its first profit in Q4/2002. By the end of FY2003, AMZN is likely to report, $1 in earnings per share, with modest growth. Such a company would deserve a P/E of 20-40 or $40 per share. You left out an issue that one in retailing considers daily. That is debt. Presently, Amazon has interest income and interest debt. The debt interest exceeds the income. As cash on hand is burned, the interest income is reduced although the debt interest remains the same. Now the real sticky part. Amazon will likely need to raise cash by Q2 2001. This means additional debt with no reduction in current debt. How does that affect your figures?