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

To: H James Morris who wrote (145045)	8/8/2002 11:48:42 AM
From: Oeconomicus	Read Replies (1) \| Respond to of 164684

HJ, let me see if I can explain this in a way that you can understand. EBITDA is nothing more than a number calculated by adding and subtracting certain line items on an income statement. As such, it is neither good nor evil - it just is. The "problem" you keep harping on is not a result of anyone knowing or not knowing what the EBITDA number IS for a particular company, because that information is or should always be available to those who care to know it and any good company should always make it as easy as possible for investors to find this kind of basic information. Rather, the problem is in how some companies might use the number to distract users of their financials from a more complete and possibly less favorable picture reality. If, for example, AMZN management told investors to focus on only EBITDA (or EBITDMA as CFO Covey once did) because none of the other numbers - interest, CAPEX, working capital needs, cash, or debt - mattered, then they would be attempting to mislead investors because they are telling investors to ignore critical information that might lead them to a different conclusion about the viability or even solvency of the business. OTOH, if they simply said "our EBITDA for Q2 was $xxxx, our net income was ($yyyy), our free cash flow was ($zzzz), and our debt increased by $aaaa to $bbbb" then there is no issue. You got that now? More information is good - less is bad. Reporting EBITDA is good - hiding everything else is bad.