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

To: Alomex who wrote (119156)	3/3/2001 4:56:48 PM
From: Skeeter Bug	Read Replies (2) \| Respond to of 164684

al, i'll bet you didn't factor in a slower growth rate due to higher prices. amzn raises prices, they lose customers. it's that simple. why don't they do away with the free shipping on $100 order? we all know why. they don't want to lose the business.

To: Alomex who wrote (119156)	3/3/2001 10:23:30 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

I have just finished running some projection based on Amazon's SEC fillings... At the current rate, they will reach Q4 with about $5-10 million in cash (after accounts payable). This assumes Amazon will hit lowered projected revenue with the same negative margins they have been running. With the right combination of another round of cuts and small price increases (1-3% across the board) plus a short term line of credit AMZN could reach Q4 with $200million in cash. This will make it impossible for them to hit the lowered prejected revenue. Moreover the actual cash burn rate in that quarter would be close to zero. This could encourage the market to extend them another loan with Amazon reaching true profitability in 2003 (of about $0.10-0.30 per share) for a price per share of $3-9 assuming a P/E ratio of 30... There are lots of agressive assumptions here. One is vendors will supply with terms when Amazon has negative working capital. Vendors just do not do that. Never have and never will. Their insurance companys will not permit it actually. The story is over. Chapter 11 is required now. Too much lease obligation to survive. This will unfold Q4 of this year when vendors want COD for product. Then Amazon needs to raise money then or revenue will drop due to lack of inventory. It is a classic retail leverage model where the leases are the debt. There is never a way out. See Wards, WT Grant Co., Rite Aide and others. Leverage in terms of pure debt or in this case, leases for underutilized distribution centers cannot be offset by the margins of retail. as I am thinking about it, see Zales Jewelers in 1992. Same problem. They are doing fine after exiting a lot of leases and vendor debt by filing Chapter 11. There was one comment that Bladget mentioned that I do not believe he even realizes how accurate it is. He stated that Amazon has enough cash to make it to profitability as long as revenue growth does not slow any further. The problem is the dual channel stores this holiday season will be able to market their on-line presence at almost no additional cost. That is the way dual channel works. Last last holiday season Amazon showed an increase in revenue year over year but not nearly equal to the percentage of total on-line sales that grew year over year. Amazon is losing market share percentage wise of the on-line market and this will be very clear during the holiday season of 2001. The only way Amazon can avoid this is by heavy advertising both on-line and off. The cash to to promote this heavily will burn cash in Q4. There is no longer a way out without a Chapter 11. Watch it unfold. It will be very enjoyable. I am most interested in how Bezos will explain this after stating Suria's report had a lot of holes and the prior report was pure hogwash. Bezos would be in a better PR position had he stated we do not agree with his conclusion and leave it at that. Working capital is extremely imortant in retailing which is so seasonal. Cash actually matters very little except it addes to working capital. Amazon's working capital is down to about $300 million now possibly even $250 million. Glenn