Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: H James Morris who wrote (116855)	2/2/2001 2:22:00 PM
From: Robert Rose	Read Replies (1) \| Respond to of 164684

i think stuck in deep bs, i mean mud. and hoping for a saving angel, i mean new economy!

To: H James Morris who wrote (116855)	2/2/2001 3:09:44 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

It seems even the bullish analysts do not believe the prejection by management of a profit in Q4 2001. There is a sentiment shift here. The Branded Internet Update - Lauren Cooks Levitan - lauren@rsco.com AMAZON PROMISES OPERATING PROFITS IN Q4:01...WE DON'T SEE IT Amazon.com (AMZN $16.25) reported Q4 revenue of $972.4 million, up 43.8% year-over-year and just above the preannounced level of $960 million. Operating EPS of $(0.25) was better than our estimated loss of $(0.28). We were disappointed by Amazon's fulfillment costs as a percentage of sales, which at 13% (our estimate was 12%) calls into question the long-term profitability potential of the business model. Not surprisingly, management attempted to spin the results and focus investor attention on its first publicly disclosed operating profitability target of Q4:2001. According to our estimates, however, in order to reach its goal, Amazon would have to grow revenue 40% year over year to $1.375 billion, on flat to lower marketing expenses. We view this as a considerable challenge. Rather than management spin and profitability forecast, we think investors would be better served by focusing on the critical issues affecting the economics of Amazon's business model. Our key takeaways from Amazon's Q4 results: (1) The company has overbuilt the business relative to the opportunity and now is cutting 1,300 jobs (or 15% of total staff) and closing a distribution and customer service center. (2) Growth in Amazon's core businesses continues to slow to levels even lower than we expected (books, music and video sales grew just 11% y/y). Lackluster core growth increases pressure on Amazon's lower-margin newer categories. (3) The margin potential of new categories appears to limit the long-term potential of the business model (we estimate new store gross margins were 8%). (4) Triple-digit and growing return on invested capital is mathematically incompatible with tolerance of declining gross and operating margins.