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

To: Killswitch who wrote (111111)	10/24/2000 9:01:26 PM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 164684

Ok so would you say that if you DID believe their guidance you would say it is highly unlikely they will be going out of business? I am going to hedge in that it depends a lot on what part of the guidance we are looking at. I finally studied the income statement and these numbers are not even what they said in their conference in my opinion. Here is your second paragrah to keep it all in perspective and please correct me if I am in error. Regarding the guidance... clearly they are running a business in new territory that no one has done before. Who knew that sales this year would be slowing down? I think the numbers they are giving out now though are pretty darn conservative. And they did surprise to the upside in pretty much all areas this quarter. Revenue projection was $680 million for Q3 2000 back in March of 2000. Projection was decreased to $600 million. Revenue came in at $638 million but $20 million of that was the transfer of toy inventory to TOY. Revenue was $618 million which is about $60 million below projections just from last spring. Not the issue that concerns me really. Here is the issue. There has been pressure on Amazon to prove they will not have a cash problem by next spring. One could also tell that by the focus of the conference call. Jennings I believe stated Amazon burned $4 million is cash. This looks accurate based on the cash and marketable securities at the end of Q3 compared to the end of Q2. However, a few items stick out at a glance. One is the $20 million that came from TOY in return for merchandise. Granted it is cash in the account but I surely would call that a one time cash inflow. You know how one time charges should be ignored. Secondly, $96.1 million of dollars in investments in investees was nicely journaled over to marketable securities which Amazon calls cash. Therefore, Amazon burned $4 million plus $20 million plus $96 million or a total of $120 million in Q3 if I did not leave anything else out. Would it not have been appropriate for Jenson to state we burned $120 million in cash but out cash position only decreased by $4 million due to one time cash inflows from these two items? This cash was not from operations and the $96 million was a bookeeping change. This is why I believe guidance of all types with this firm is suspect. Glenn