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

To: Victor Lazlo who wrote (146388)	8/28/2002 9:26:26 AM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 164684

"In addition to issuing new shares to pay down debt, won't they also at some point have to issue new equity to fund ongoing operations? Heck they might need to do a secondary just to pay for this free shipping thing!! " Victor, It appeared until the free shipping was lowered further, that cash burn was not too much of an issue at this point in time. The main reason, by looking at both the income statement and balance sheet, is Amazon is selling more of other firm's merchandise and not carrying much inventory of their own. The reduction of inventory gives the temporary illusion of cash flow neutral. There are two problems here. One is inventory cannot drop forever. Zero is the limit. The other is a billion dollars of their debt was zero coupon. I would have to look it up again but I believe the zero coupon does not last the entire ten years of the debt but only five years of it. The five years are coming to an end. The cost to Amazon of the free shipping is an unknown factor to me at this time. There is another unknown issue. Amazon promised to expense options. Amazon has a history of a huge amount of option grants. If they decide to pay the employees real money, that would drain cash much faster. I do not believe AOL is in a position to bail them out again.