Hi Bobby, It is now apparently too late now for any brilliance out of AMZN ... I'm not sure I agree everything expressed below, but at least these guys have an opinion. Kinda entertaining. AMZN's demise may cause collateral damage in many areas...bonds, infrastructure, B2C, advertising, courier service, banks, brokers, etc etc.
MaverickTrader.Com: MaverickTrader.Com says today, "WE BELIEVE AMAZON.COM
STOCK IS WORTHLESS."
DEC 5, 2000, M2 Communications - SHREVEPORT, LOUISIANA -
"No, really. We think that Amazon.Com (Nasdaq: AMZN chart, msgs) is worth LESS than ZERO.", says MaverickTrader.Com President, Don Harrold.
THE FULL REPORT: We dug deep and checked the numbers. Our call on Amazon.Com is based on (among other reasons) the following data:
1. Amazon.Com continues to lose money. How many more quarters do investors need before they ALL throw in the towel? We suspect not many.
2. Amazon.Com has a NEGATIVE "book value". (as of 12/5/00. see biz.yahoo.com This means, basically, that if you sold off all Amazon.Com`s assets, and subtracted their debt, the stock value would be LESS THAN ZERO.
At some point, a company needs to get ABOVE ZERO in that department.
3. In our opinion, Jeff Bezos looks like a deer caught in the headlights of an oncoming truck. Seriously, seen him in interviews recently? Whoa. A couple weeks ago, Mark Haynes (CNBC Anchor) hammered him in an interview.
Mark asked him about comments made to investors regarding Amazon.Com and its business model. Jeff seemed to fish for answers. We believe Jeff fudged the truth, and said that Amazon.Com is not really a "virtual company". HUH?
As Mark pointed out, AIN`T THAT THE POINT? We think Jeff, needs to be more honest. We think his demeanor should frighten Amazon.Com shareholders. We think he`s not exactly the picture of a guy in control.
5. We believe Amazon.Com spends too much cash to generate "eyeballs". Anyone in business knows it doesn`t matter who comes in your front door.
What matters is how many times your cash register rings with a profitable cash sale. Amazon.Com spent millions to generate so called customers (recently, they sent catalogs to "real world" customers), but fails to successfully turn those customers into a profitable business.
6. Warehouses jammed with unsold stuff. Take a second to remember that Amazon.Com was supposed to be a "virtual storefront" (Jeff Bezos seems to deny that now, though). You know, no need for big bulky warehouses - that was the old way.
Well, guess what? Come to find out, that "old way" is the best that Jeff Bezos looks like he can come up with. Hey, if you want "old world" retail, why not just stick your money in K-Mart (NYSE: KM chart, msgs), JC Penney
(NYSE: JCP chart, msgs), or Sears (NYSE: S chart, msgs)?
8. Oh yeah. AMAZON KEEPS LOSING MONEY. That still counts, right? Efforts are made now to increase the customer base. More sites are online now with the "Amazon.Com" logo.
But, they still can`t get past that pesky idea: YOU GOTTA MAKE MONEY.
We expect that Amazon holds nice volatility for investors ON THE SHORT SIDE. Unless Amazon.Com drastically changes its business model, we believe that the ride to zero is underway.
Hey, all this is our opinion, clearly. Before Amazon.Com hits zero, there are plenty of nutty ways that the stock price could get a "boost" on Wall Street. You know, like some "analyst" "upgrading" Amazon.Com. Or, some group of starstruck investors that dump a few billion into the failing business. But, our opinion about the stock (absent some miraculous change to the business model) remains that there is NO value to Amazon.Com.
If you own AMZN, strap yourself in.
Here is where we believe that Amazon.Com made some key mistakes:
1. They sell CDs. CD sales drop across the board. Too much competition. Too much Napster. Too much money to lose.
2. They use low price as the reason to shop at Amazon.
Folks, someone needs to tell Jeff Bezos that NO ONE CARES how many people bought a book or two at Amazon.Com. Investors want to know HOW MUCH MONEY does Amazon.Com make.
Gee whiz. Ask any kid that sells lemonade on a street corner this question:
"How many cups of lemonade can you give away for free before you have to close?" We bet that most 10 year olds could get it right. For Amazon.Com to make money, they MUST begin to tout convenience, service, or selection, as the reason to shop at their portal. Whoever told Jeff Bezos that cheap prices was the way, apparently forgot some key facts. You know, like, "it costs us money to ship this stuff. That will take some of our profits." Or,
"we pay people commissions from our sales, and that will eat more of our profits." OR, "there are people online that will sell for LESS.
Price wars tend to cut into profits, too."
3. They did not open up REAL WORLD "bricks and mortar" storefronts. See, it ain`t real glamorous, but it WORKS. Look at Barnes and Noble (NYSE: BKS chart, msgs), for a lesson in what works. By the way, Barnes and Noble`s
web arm (Nasdaq: BNBN chart, msgs) is in the doldrums, JUST LIKE AMAZON.COM.
These are a few ways that we believe Amazon.Com has a chance turn itself around.
Coming soon to a mall near you, "Amazon.Com"?
The reality is that, in our opinion, there really is NO viable business at Amazon.Com. There is no way we would put a penny into Amazon.Com stock.
We`ll wait til we see significant changes to their business model.
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